What if your battle tab was to show an ongoing conflict between two ships where you could choose whose side you joined in on?

Do you side with the weaker ship and try and take out the bigger one for a better reward, or do you side with the more powerful ship for an easy kill?

Battles would be fought as normal, but damage would be randomly targeted and/or split between the two attacking ships from the one fighting alone.

If the ship you are fighting alongside gets destroyed - then you loose out on the chance to fight the other one and/or take massive damage from the explosion.

This would go nicely if there was already some kind of larger NPC system in place.
For instance if the factions actually where dynamic. Missions that reflect helping or hindering these factions would allow for these situations to arise. It would also work well with a favor system. Kill more of X and your reputation with them goes down while with their enemies Y it goes up ect.
That or some kind of NPC base implementation.

All in all its a good idea but the system isnt really in place to work it that well because this would literally be the only thing you really do with NPC's as far as interesting interactions.

Yeah I know.... but it makes for a good start point.

If popular it could be expanded to include all the things you mention.

It doesn't make a good start point though, that's the problem. I suppose it could be solved by being introduced initially with a mission chain of sorts.

Why not?

It doesn't HAVE to tie in to anything else, it can be the thread that starts something new.

If war breaks out among two races then the first effect that it has is, usually, that you see reports of them fighting and, if your yourself are involved in military actions in the area, you may find yourself dragged in to a conflict.

IMO, the NPC battles would be the perfect place to introduce the concept of conflict within the various factions and races.

You don't have to have a mission spoon feeding you all the information and explaining to you exactly what is going on.

Sometimes its more fun to be dropped in to the action and find out the reasons behind it later!

You say it doesn't have to tie in, but the way you describe it is as if its a chapter based mission chain.
That aside you are right that it doesn't HAVE to tie into anything else but judging from how the game has been run up to this point it probably will.