To be honest, sometimes I think that the official rules overpower Fire damage in the name of metagaming, much like WOTC giving the Axis & Allies USS Arizona a "Kill This Ship First Even If It Costs Half Your Fleet" special ability. Granted, when there's a fire at sea all hands run TO it to get it put out above all other priorities, but it would seem to me if you take a Fire and a Flood in the same turn the Flood should have a chance to kill a Fire.

Kirk, my understanding is the same as yours. Basically, if you have a Swan take a fire hit you might as well go straight to "ram it into the closest enemy ship you can find and Abandon Ship." (Though I'd like better Lifeboat mechanics for this...)