Andrew - how I have done it, is paint the model, then take the same color with x amount of white in it (I just eyeball it) and thin it a lot (almost like chalky water) then very lightly put coats on and let it dry until I am happy with it. That was on Navy Blue/Gray, but other colors you would pick whichever color that paint would fade to, like with faded OD I would probably use OD with x amount of yellow with a touch of brown etc....
I've also used pastel with some luck... just pick the complimentary color and brush it on over the areas to fade until the desired shade is reached Remember when you clear coat over it the pastel will not be as prominent as it was before Also you have to grind the pastel then keep crushing it to ensure it is small particles that go on the kit.. Unless you have a large selection of colors in pastels this method would limit you a bit in the colors you could fade. Of the two I prefer the top selection to fade.
Now if you are talking about preshading panel lines, I don't do it, but just spray black or a dark color over the panel lines before painting. Carefully spray the overcoat so it is lighter at the panel lines and the darker color bleeds through a bit.
Practice on a scrap kit first until ya feel comfortable with it...