There are ways to get textures to be transparent and animated, but they're complicated, and I'm not sure it can be done with milkshape at all. Gun size is all up to what's required by the ship, I don't know if any limits have been hit.
The control scheme is pretty much mouse and keyboard only though. You can probably setup a gamepad to work, but the interface is much simpler with a mouse, and the steering commands are not meant for a joystick type input- you press a key to go right, left, up, down, and roll. There's no range of motion, like you would get with a stick, you just do a maximum turn when you press the key. You could probably set it up to steer with the 8-way digital pad on a gamepad without too much trouble, but any kind of control axis input just isn't supported, unless you know how to program it in yourself.