i've used the same technique on my armour. it's pretty slick. though it could get more complicated if you're going for screen acuracy. lucky for me my gear is for a custom.
the best way to do this is by drawing the damage on paper and copy it to you pc. print it on label paper (label paper for mail or name tags). cut it out with an exacto knife. stick it where you need to and paint. you need to be creative when you do multiple layers of damage.