These are some images of the catastrophic damage system I developed at Codemasters with one of the graphics coders for Operation Flashpoint: Red River.
We came up with a cool system similar to the one Valve developed for Left 4 dead. When a character was hit by a high caliber weapon or explosion we would remove sections of the character mesh to reveal the damaged tissue left behind. The tool would also automatically push the verts in around the removed/damaged section so the transition between the damaged and undamaged body would be seamless.
The look of the damage as meant to resemble the kind of heavy trauma caused by nearby explosions or shrapnel. Apologies if you are squeamish.
Here are some screen grabs from Max showing the Damage tool in action on one of the US Marine Riflemen. In the game a blood "Spatter" texture was applied around the wound to further conceal the transition between damaged and undamaged.
Here are some images of the damage meshes themselves.
This is a page from a document I put together for the next Operation Flashpoint we were planning after Red River. It outlines the improvements I wanted to make to the damage system. Rather than just catastrophic damage, I wanted to simulate everything from bullet wounds all the way up to heavy trauma. These would be incremental so you could literally bore through a character with sustained fire. It would have been great :-)