Modelling engine wear and WEP limitations

[Crumpp]

All i know is that takeoff power or emergency power is called that way for a reason: it is to be reduced to lower levels under all other regimes of flight.
Otherwise they would just call it full power and be done with it.

Exactly.

how such a game mechanic/feature could be implemented?

The most realistic thing your game could do to simulate it is just have the engine start losing power gradually.

The most common sign of engine wear in RL is inability to develop full rpm and loss of compressions.

This is not a dramatic event and is why compression checks are done at annual at a minimum. A compression check would be in order after running an engine at Emergency power.

The longer a player left the "emergency rating" engaged beyond Operating limits, the more rpm and compression he would lose.

My 2 cents...

Here is what Lycoming's Key Reprints have to say about following the Operating Procedures in their engines:

Pilot technique is another factor affecting engine life. Following manufacturer recommendations could be categorized as good operation. On the other hand, complete disregard for these recommendations could conceivably cause engine destruction in as little as 100 hours. Although this would be extreme and unusual, pilots who regularly climb at steep angles, make abrupt throttle changes, improperly lean the engine in climb, exceed maximum specified manifold pressure and/or RPM, chop throttles abruptly and let down rapidly causing rapid contraction of metals that have been up to operating temperatures are using techniques that may shorten TBO.

http://www.lycoming.com/support/tips...%20General.pdf