Draoi's logo/clown-barf problems aside, I think the main problem with this is determining the scale. If everyone always hit 1-100 (or any other fixed range that all bots fell into), it would be fairly easy to do sometihng that got brighter on one end of the spectrum (this is why colors for ratios and "opponent health status" work). Since damage can vary so much between bots (one could hit for 20-40 while another could hit for 200-400), there's no single static scale that would work universally.
Now that I think about this some more though (and perhaps this is what you were suggesting), one way this could potentially work is by creating a dynamic scale based on how much damage you do. E.g., if your bot does 200-400 damage, a scale within that range would be used: hitting low 200s would be darker, hitting upper 300s would be brighter.
This is really just a bit of eye candy though and I don't think many people would even notice it, so consider this something I'd do, but it's low priority.