Except for the fact that turning "realistic gunnery" off does more than increasing gun strength, it also affect things like recoil, bullet drop and bullet travel time to target. Basically, if you turn off realistic gunnery, you turn IL2 into an arcade game.
Perhaps to some extent, but you still have bullet travel time, you still pull lead. It doesn't turn them into lasers. What it does is take the "bullets do no damage except holes in a wing" and turn it into "bullets do damage and rip the wing off with enough hits" -- the end result is far more comparable to what I've read about and seen footage of. It's not perfect, but again the end result is far more realistic. (more often than not)
I think that you'll be hard-pressed to find any accounts of any aircraft sinking a cruiser with just MG or light cannon fire. Those ships were armored, had double hulls and were designed to survive hits by bombs and artillery shells.
As I've pointed out, it's quite likely that airplanes armed with just MG or cannon could damage unarmored ships, and, if they got quite lucky they might even be able to disable them, but that sort of damage would only be due to a "critical hit" which damaged a vital part of a vital system. After all, if you only needed 0.50 caliber machine guns to take out a cargo ship, then why did planes sent on anti-shipping strikes carry rockets, bombs and heavy cannons?
As for exploding ships using just MG or cannons, I think that you've watched too many movies. Alternately, you've seen highly edited gun camera footage selected to show the most exciting bits of the action. When a target blows up spectacularly due to MG or cannon fire, it's not the gunfire that causes the explosion and fire, it's the high explosives or fuel carried by the vehicle that does it. The bullets just set the blast off. There's plenty of footage showing planes shooting at ships and boats where the the target doesn't sink and probably wasn't seriously damaged, despite the impressive water fountains from all the bullets.
Those ships were designed and built only to protect from other ships. Many had glaring armor issues, like the sides were armored, but at long ranges often "lobbed" shells came down through the top deck with was not armored (or, not as much, depending on the type of ship) allowing shells to puncture and detonate inside the hull. Take HMS Hood for example. Pride of the battleship fleet, and taken out with a single shell dropping in through the thin top armor.
WW2 ships were woefully ill designed to take into account aircraft, as they were throwbacks from the WW1 era. Sure, the design improved, but it was still an outdated idea. When aircraft became a threat all they did was add tons of AA guns all over, bristling like porcupines, but the general designs didn't change all that much. The technology involved, the guns equipped, all improved, but at heart it was still a WW1 Dreadnaught.
That is why airpower made massive surface fleets obsolete. That is why carriers became the new battleships. Although, even the carriers which were designed to use and deploy aircraft, still were not so well designed to protect against them. Bombs often punched through the thin upper deck, meant to support weight rather than protect against bombs, and exploded inside the hangars, or other vital areas. The best defense really was just to stop the planes before they could attack.
About the "sink" comment: You're not punching holes in and the water sinks the ship. You're knocking enough parts around and blowing pipes apart and such, so that high pressure boilers explode. Or are setting of powder magazines. You wouldn't think .50cals have enough punch to reall harm a massive iron locomotive, right? Well, they blew the boilers on thousands of them when making strafing runs on them. This does not mean the rounds exploded, or that ammo or gas was set on fire then exploded, it means that the vital balance of pressure and heat was disrupted either but punching holes in the cooling pipes or blowing out release valves or something. Whatever. The end result is you blew the non-explosive locomotive engine sky high. The same goes for most shots of WW2 ships being strafed that I see. You see the boiler blowing, and a shock wave from the center of the ship.
So while armor does block bullets, there are very complex systems in ships where hits to any number of parts (inside that system) will lead to a failure of the ship as a whole.
My thoughts on how it is in IL2:
I think the problem is that the airplanes model interior bits like control rods, radiators, flaps, wheels, and all those "number of parts" but that the ships you see on the water are just a single box that soaks up hits with no vital components to kill.
I think it's just a fundamental game issue, personally.