Found this old feature in the resource section from garagegames.com. Even though the code of Torque3D seems to have changed a bit, I could get it to work on the first try. Then I just had to build some particle effects and cut together some sound effects that fit and there we go.
It is quite fun to just shoot a player with a 0 damage weapon and watch the blood spill. I tried to find a good compromise between realistic size and big enough so it can be a visual indicator for player hits.
The particle effects are a combination between smoke, impact blood explosion and blood droplets that spill out at the side.