Well, after a lot of tears & toil I've finally managed to install torpedoes on merchant ships.
No, not because it's historical - rather, this is the first step towards adding new effects when a merchant ship encounters your submarine. I am going to use the torpedo spawn effect to spawn various objects & effects from merchantmen:
-Lifeboats
-Jollyboats with the ship's cargo manifest & officers
-Life Rings
-Smoke Pots
-Life Jackets
-Cargo Crates
-Oil Drums & Barrels
-Panicked crewmen jumping overboard
The great thing is, you can simply create a 3d object, add it to the "Library" folder, and then specify it in the torpedo spawn effect file & have it appear, instead of a torpedo. This means that you can place weapons nodes all over a ship that will spawn as many or as few objects/characters as you want. The launcher even specifies an ammo loadout, so you can control how many items are spawned. Now freighters, troop carriers, & hospital ships can have the appropriate # of lifeboats with the right characters on board.
Just remember to be careful when the merchant's jollyboat spawns - If it's a Q-Ship you'll get a blast of shrapnel instead of a cargo manifest.