On my setup, I have Silent Hunter III patched to v1.4 and the GW Mod installed, no other mods.
So far, I have had the following experiences with 4 careers starting in 1939 out of Wilhelmshaven in a type VIIB sub.
Career 1 going to assigned patrol area by way of the English Channel. Almost through the channel when I find a lone Large Merchant.
Fire 2 torpedoes, set for contact pistols running at 3 meters, targeting the Bridge and the Engine room. First torpedo hits and breaks the
ship in two. Second torpedo detonates in the bow cargo section, whole thing sinks in about 5 minutes.

Couple of hours later
while running on the surface at night, I am spotted by a Destroyer and promptly shelled. I dive the boat and on the Destroyer's second or
third DC run, he wastes me.
Career 2 & 3 Again try going to patrol area through English Channel. Both times caught by different patrols, once by an armed trawler,
once by a PT boat. The first time I was submerged, the second I was running on the surface at night.
Each time I was discovered, the patrol called in extra Destroyers, and both times I was DC'ed out of existence.
So I would have to say that I'm not seeing any problems with the Destroyers or other patrol vessels not being "smart" enough.
Patrol 4 Decide it is time to go around England to the north
Somewhere North of Scapa Flow I find a Medium Merchant (C2) traveling by itself at night. I set a torpedo for 3 meters, contact pistol
and fire from about 700 meters. The torpedo explodes in the vicinity of the smokestack and over the next 5 or 10 minutes the target's
speed is reduced from 7 Kts to 2 Kts, over a 20 or 30 minute time period the ship takes on a port list of about 25 degrees and settles
by the stern. After 2 hours, it is appears that the damage is not enough to sink the vessel so I fire a second torpedo into the engine
room. This torpedo takes out the engines, the speed decreases to 0 Kts, the list straightens out and then over the next 20 to 30 minutes,
the ship sinks lower at the stern until she finally slips under. I receive credit for the kill in the patrol log and then we are off again for the
assigned patrol area. I am spotted and attacked by a Hurricane fighter North of Scapa Flow, and have been spotted and attacked by
Swordfish aircraft twice on the northwest side of England (think maybe they are from a carrier, but can't be sure.)
IMO the ship damage model (although only small experience so far) pretty much acts as described by the modders. My general experience
with the British naval forces is they seem to be more present that the stock SHIII game and don't appear to be lacking in their ability to find
and attack me.

Thanks to the whole GW group for bringing this to the SHIII community, you guys definetly rock