Native DBP raycasting is very slow. Since then, Sparky's great DLL really changed that, so raycasting has been a viable option for a long time now.
DP has raycasting built in. You're raycasting to physics bodies, so it should be very fast. That is definitely what you should use. If the bullet path intersects a physics body, you apply force at that spot, in that direction. The results should be nice, especially coupled with either an appropriate animation, or ragdolling, or both.
If you're using a missle, then you wouldn't use raycasting. The missle will be moving much slower anyway, so it won't be a problem.
Come see the WIP!