And you're right. Mixing simulation (physics engine) and arcade has proven to be quite a task indeed. It seems that most issues with the maneuverability come down to a problem, that it is hard to visualize the ships orientation (especially when they start breaking down). I'm introducing an alternative control method in version 0.4.3 (after the next release), that hopefully makes things easier.
Star Control was an old DOS game, but it absolutely nailed the arena combat physics resulting in some very fun battles. It even had planets with gravitational pull. If there's any way you can find a playable version of it on emulator that could give you some really good ideas as to what the movement should feel like.
As for visualizing the ships orientation . . . yeah that would be harder to do as the ship gets blown to bits. Maybe have a permanent "outline" of what the ship looked like to start with so that no matter how much damage it sustains, the player can always tell which way is "up".
I'm actually very familiar with Star Control; most of the current and upcoming module types are taken directly from it.
Major challenge with the movement is, that although the game may resemble Star Control, its physics work more like in Elite (in 2D, though). Simulation is based on rigidbody physics, forces and masses, that (with modular ships) practically preclude the traditional arcade-movement. As everything floats in a vacuum, only small adjustments are encouraged. Most test players prefer tapping WASD-keys instead of pressing them. If you hold button for too long, you'll definitely overshoot the target.
Your feedback is appreciated and taken into consideration. Main focus of 0.4.3 will be in movement and controls. I'm planning a more accessible control method, which automatically directs the ship where the user presses (no need to worry, which way is forward). Let's home it helps.