There is literally only one thing in the world that can describe I-War with it's pure awesomeness. And that is as follows:

One of the best space sci fi sim I have played, not only space sims, but as well ALL the games I have played.

Hmmm... it seems like this one may actually be a sim(e.g. X series, Frontier First Encounters, Elite, etc.) rather than a mission based combat simulator in space(e.g. Wing Commander, Freespace) as it apparently includes trade which combat sims skip. The again, maybe not since I've tracked down another review which has nary a mention of trade just various ships systems, that inertia somehow makes this a good space sim(well, I don't buy that), and something about cut scenes.
The systems idea sounds interesting, Battlecruiser/Universal Combat series had that.
So, is this game ENTIRELY linear(or nearly so) mission based or is there freedom to go explore here and there, etc.? (I detest mission based games...)
This forum sw that they use here is beyond awful... (editing screwed up the quotes apparently...)
yes editing screws quotes, was a POS forum sw... (keeps moving the '[ / quote ]' piece to the end of the edited message FFS!)

There's no trading in I-War 1. I-War 2 had trading and piracy, and was more free-roaming.
Independence War puts the 'Sim' into space-sim. Some other games claiming to be space sims are really like WW1 fighters in space. That's not to say they're not great games, because they are, but they're not simulations in a strict sense. In I-War all the ships systems are simulated and can be individually knocked out.
In many space sims the ships are actually travelling very slowly - tens of metres per second. In I-War standard cruising speed is 1000m/s. The only problem with that is it's difficult to get a sense of scale when you can whiz past a 1km long space station in 1 second. That's one of the reasons a speed limit was implemented around space stations in I-War 2.

Thanks. I gathered that there was trading since the first review that I came across was actually for IW2 and it mentioned trade, so I assumed that it was carried over from the first game.
Completely kills my interest though, as I mentioned never interested in mission based combat sims, and as to "realistic" physics, well I don't buy that it makes a good or even fun sim. Sure realistic physics allows for some interesting tactics however it could also make a game incredibly tedious when maneuvering out of combat, although I gather this game is all about combat anyways... (probably why I skipped it when it was new as I'm sure that I must've read the reviews back then... and the newsgroups...)
As to speed, in other sims, it actually depends and many of them it depends upon a particular ship, not mention in many of them they never bother define exactly what a speed number means as than it's faster or slower relatively speaking.
As to space sim, was as can be inferred from my prior post I only consider open ended snadboxy games with trading, freedom to explore, and possibly optional side missions to be a "space sim" otherwise it's merely a combat sim where you get to do the same missions over and over. I never cared for the latter while OTOH I do enjoy spaceship strategy and tactical games, and 4X games but 4X tends to be more sandboxy as well...
Going to have to fix the stupid quotes.... I just know it... this forum sw is pretty buggy...

Sounds like I-War 2 will be more your thing, plus it has a ton of mods, including some ones which expand the trading system and free-roaming.

There's not much about manouvering out of combat. Even then most of it can be done by autopilots. Approach, Formate, Dock, Match Speed are typically the only important ones.
In-combat, however, the Newtonian physics help with the idea that space is space and that inertia is inertia. You combine that with the fact that every system that the Dreadnaught has also has a purpose.
Speeds in I-War are in meters per second... or am I missing the point of here?
"Space Sim" in the major notion that physics play a huge role, damage is quite severe. "Combat sims" are kind of.. a weird way to describe it. Sure there isn't trading, but that's what happens when you're a pilot for a Navy. Brass tells you where to go and what to do. Mission after mission, yes, but they all bring interesting differences down the line.
I do enjoy 4x games myself, as well as free-roaming, but none have actually done well enough with the physics and control schemes. Most are so heavily assisted that the ships don't feel like they have any form of mass, not even the X-series manages to get it right.

Particle Systems did a great job of integrating those realistic physics in a believable and practical manner. It makes for interesting combat tactics as you say, but it's not at all tedious out of combat, because of the various sensible autopilot modes that are available to you, and the 'assisted' flight mode in which the computer will fire thrusters automatically to try to keep you heading in the direction you are facing. Naturally this assistance can be switched off at any time to give you full control, so you get the best of both worlds.
There's probably more variety in the missions than you imagine, but yes the focus is on combat in most instances (albeit not all).
Also, there is a command-line option which lets you explore the galaxy as you wish by selecting your own LaGrange jump point destinations (even if there's not much to do other than look around).
I agree with Ravenger that I-War 2 would definitely be more your cup of tea. I-War 1 might surprise you, though. If I-War 2 shows up here and you enjoy it, you should at least consider grabbing the original.