Trying to understand something I think is related to PE3 (but might not be). I call it the "mystery fireball."

(artillery training mission, outcome easily repeatable)
This seems to happen everytime I hit a merchant with a few deck gun shells in the area of the hull towards the center of the ship. Now, it's a bit hollywood for my taste, but that's not the real issue. My concern is, first, its consistency: the effect happens every time with a number of merchants tested. Such a dramatic effect that is so predictable is kind of a shame.
Second, despite the enormous explosion, the ship carries on as if nothing happened. You would think at a minimum, there would serious secondary fires. Also, the location suggests that the ship's machinery should be wiped out.
Anyone have any idea what I am seeing here? I'd really like explosions like this to be a surprise when they happen, like a lucky hit on the ship carrying ammo or av-gas in a convoy.