You could use them as weapons, albeit ineffective ones, in D1/2 as well. I remember seeing my one friend reduced to flares and ramming in the middle of a D2 level; not a pretty picture.
D3 flares also do one point damage. The easiest way to figure this is to watch your shields when Guidebot pegs you with one (he does, and he will as long as he's out).
(One time Guidebot pegged a Stinger right on the nose with a flare. And in D3, they stick, so I've got this robot with a flare sticking out his nose. LOL! )
In D3, the flares do a menial amount of damage, taking quite a number to really cause any effect other than lighting up the robot. I assume they do actually do one point of damage, but then again, one point doesn't do a lot in anything Descent-related.
A flare can kill a ship at 0% shields...which is rare. (Usually a ship that hits zero points shield is just half a second from being atomized, anyway.)
But I can't help but like the way they made the flares stick to the bots instead of just hit them and explode. Now you can do all sorts of fun stuff with them!
Destination Saturn... if that is the same as the level 7 boss - I really have no idea - you are looking at, I believe, 4000 flares, but it could be done if you had the energy (I mean in a physical sense, not your ship).
I once mapped flares to my fire button before logging onto PXO for some D3 action (so that when I hit fire, I would fire my regular weapon in addition to flares). The flares, if they hit the windshield just right, can actually obstruct other players' views. But everyone was whining and complaining, so it was especially worth it.