This is more of a question than a suggestion, but:

Reaching over to hit the " key wastes valuable milliseconds in a dogfight which can mean the difference between life and death. I tried binding "toggle flight mode" to the mousewheel so I could change more quickly, but it's way too confusing keeping track of which flight mode you are currently in and just how many times you actually rotate the wheel.

Is there a command to *set* the flight model to physics or arcade rather than toggling it? If so, I would bind "mousewheelup" to physics and "mousewheeldown" to arcade. That way you could quickly change between arcade and physics in a dogfight and not have to worry about which mode you were in in the first place.