I can't remember the details, but I've read of a few occasions a ship would explode big time - ammo or AV fuel. The explosive force would rock the boat, shrapnel would splash around them and the boat was over 1000 yds away. One boat was on surface at night and the bridge crew felt the pressure wave.
The game does model ship explosions. It doesn't surprise me if you are close enough and the explosive force large, damage could be done.
I can only guess, but 500 yds may be a safe distance. Hard to tell what closing rate you had, but you may have been under 200 yds.
:hmm:Although, I thought torpedos don't arm if torpedo run is less than 300 yds.
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