Yup, they do board. First time, I was taken by surprise. My slow but mighty galleon stopped responding suddenly. Then I noticed that a half-sunk AI sloop has attached itself to the galleon and is trying to board... Of course, the galleon crew routed the pesky boarders.
As to sails: I've been quite successful in 1.03 with taking them down. It does take patience though and several "goes" at it. The biggest 'grab' I had was the whole French fleet consisting of three second rates, four 3rd rates, several 4th rates and a bunch of smaller ships. All I had at the time was some sloops, 3 fluyts, 2 galleons, 2 frigates (5th rates) and 1 second rate.
I had to make several 'rounds' and faint attacks (with sloops) to stretch out their fleet. But in the end, I had demasted them all. I think, only a couple French sloops were sunk. Once they're demasted, it's easy to force the ship to surrender.
The biggest challenge was to maneuver through disabled French vessels and not get caught in their fire (they still can fire while being immobile) while I was trying to demast the remainders of their fleet that still could move.
By the way, the AI demasted my 2nd rate early in the battle so my "tank" was pretty much "out of the game" for most of the battle. Heh, now that I think of it, I regret not recording that battle. It was epic.
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