I can think of several modes or settings for flight assist that might be useful;
Stability Mode
Like SAS in Kerbal Space Program, this mode only applies flight assist to rotation, allowing you to have better control over your rotation. Unlike with FA OFF, this links joystick actuation directly to rotation rate, similar to FA ON, but still allowing you to do the crazy maneuvers.
Reduced Dampers
In Space Engineers, even with the equivalent of FA ON, you can still do FA OFF type maneuvers, simply because the thrusters aren't very strong. Reduced Dampers would reduce the power used by thrusters when FA is using them, but not when you are sending inputs. It allows for the more directed control movements of FA ON (I want to go in this direction specifically), and combats drifting, without sacrificing the ability to unlink your prograde vector from the nose of your ship.
Relative Dampers
Want to truly link up with your wingmen (or anything else for that matter)? introducing relative dampening! this allows you to shift your flight assist's frame of refrence to a point on another spacecraft (or station). It will try to match velocity, and optionally, rotation. This would probably be achieved by holding a modifier key and aiming at the point you want to lock to while engaging flight assist.
all of these could be set up in a menu similar to the weapon group menu, so you could choose what attributes to use in your flight assist modes.
Speaking of prograde, we need a velocity vector display, so we know in which direction we are going.
Stability Mode
Like SAS in Kerbal Space Program, this mode only applies flight assist to rotation, allowing you to have better control over your rotation. Unlike with FA OFF, this links joystick actuation directly to rotation rate, similar to FA ON, but still allowing you to do the crazy maneuvers.
Reduced Dampers
In Space Engineers, even with the equivalent of FA ON, you can still do FA OFF type maneuvers, simply because the thrusters aren't very strong. Reduced Dampers would reduce the power used by thrusters when FA is using them, but not when you are sending inputs. It allows for the more directed control movements of FA ON (I want to go in this direction specifically), and combats drifting, without sacrificing the ability to unlink your prograde vector from the nose of your ship.
Relative Dampers
Want to truly link up with your wingmen (or anything else for that matter)? introducing relative dampening! this allows you to shift your flight assist's frame of refrence to a point on another spacecraft (or station). It will try to match velocity, and optionally, rotation. This would probably be achieved by holding a modifier key and aiming at the point you want to lock to while engaging flight assist.
all of these could be set up in a menu similar to the weapon group menu, so you could choose what attributes to use in your flight assist modes.
Speaking of prograde, we need a velocity vector display, so we know in which direction we are going.