So, I worked some more on the flight controls and I'm finally starting to get the right fast paced "arcade" feeling that I'm striving for. I believe that the most important thing is to make the core game play work and feel right. It should be fun to play even if all the bells and whistles are not there.
Now, I realize I probably won't make it before the end of the deadline but this has still been a fun experiment. I will surely continue working on this and see if I can finish it soon.
Anyway, here's some footage of the flight controls.