Plane identification is definitely one of the trickiest things about simulation mode. You didn't mention whether you were playing campaign or multiplayer, but Lost's hint about the blue/red bands for identification only applies to team battles in multiplayer.
I've just begun trying to complete all of the single missions on sim, and I've noticed a few things. Let me start by saying that I'm on Xbox, not PS3, so I don't know if this applies to you as well. But I've found that at a distance, when the planes are nothing more than just dots, the enemy planes appear to be a slightly lighter color than the friendlies. So if you have sight of more than one at a time, and one is lighter than the rest, that's your bandit.
If it's Spits vs. 109s, once you get a little closer, the distinctive wing shape of the Spitfire can be used. It's got that rounded elliptical wing, whereas the 109 has squared off wingtips.
Once you get your crosshairs on a plane and are approaching firing range, if he doesn't try to elude you, it's probably a friendly. If still in doubt, squeeze of a couple of rounds and he'll let you know if he is.
As for keeping someone in view with the freelook, good luck with that.
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