Tenchi,
There's a fellow, a very good artist, at the Aerodrome web forum who loves the Testors Custom Decal System. Check out this thread:
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http://www.theaerodrome.com/forum/index.php?showtopic=13797
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Todd starts out asking pretty much the same question you have, and ends up really liking the product after trying it out. He's posted some images of models he's made with his custom decals applied to them, and they look good.
I'll probably pick up a kit and see how it goes.
Regards,
-Drew