Personally I like how ArmA tries to mimic reality as far as possible but still make the game playable, so my post will focus on what I believe to be realistic. All respect to those that care more for the "playability" but I am in this case not one of them, sorry.
As mentioned at least once earlier in this thread, AA missiles keep getting better at telling the difference between flares and engine exhausts (of course flare designers work on better mimicking as well). The newer (3rd to 4th generation) AA missiles, the latest Stinger for example, are apparently (at least according to the manufacturers themselves) able to ignore most modern flares to a large degree. Of course stinger missiles are not present in the game... but since the only man-portable AA system in the game is based on a AT weapon I guess one cannot look at specs of a specific weapon.
Furthermore the scenarios of ArmA 3 take place in 2035 and weapons and decoys might very well have evolved further. Today's "smart" AA missiles use multi-spectral detection, focal plane array detectors to "see" the shape of the detected object, on board computers to analyzes it all and can be deployed at ranges of up to 6km and reach a target at that distance in under 10s. My personal guess would be that in 20 years flares would be completely useless against the "state-of-the-art" AA and only useful against nations and para-military groups who cannot afford or get hold of an abundance of the $30000+ a piece AA-launchers... Of course other countermeasures might have been developed by then like directional EM pulse generators or whatnot but i do not see a way for a flare to mimic every property of an aircraft.
On a strategical note; Don't hover in enemy territory, you will not be able to move away from the missile's path, flairs or no flairs. A quick snipe from a distance or keep moving fast at low altitude instead, you will not get as many shots in but neither will they! Oh and don't dive down with your flares... it kind of goes against the purpose of them if you are right in the middle or hiding just behind them ;). If the enemy has a lot of AA in the area of operations, you will NOT be able to use reliable air support, it's as easy as that. Use ground troops or artillery to destroy any static or self propelled AA and suppress enemy infantry so they can't deploy man-portable AA. Use the element of surprise and hit hard on the first pass, don't squat around or go back for seconds if you are unsure of AA capabilities. If they have AA they will have had time to deploy them and you will walk right into a meat grinder. Hit hard and run away and rearm and let them feel safe again before the next run.
Sorry for the ramble but in my little world, air is vulnerable, especially rotor-winged air! Bad intel and poor planing kills pilots. If used right air will dominate, if used without caution you will probably get shot down before even seeing the enemy, crash right into one of your main battle tanks and roll burning through the rest of the armored platoon... not a good way to make friends i have heard.
Love ye'all
/C
