I need to make this ship out of cake. I don't have an airbrush machine, but I need to come up with this coloring. I also wanted to do the shadowing on the top of the ship that give it it's rough edges. Any ideas?

Maybe you could brush on the color and then wipe off the excess with a paper towel.

I was going to cover in grey fondant. Do you think I should cover in a different color?

I would cover the whole thing with gray, then line the windows with a dark grey to give them depth....as far as shadowing, I use a type of sponge method with mine to get a look that I want. I take a coffee filter or paper towel and ball it up so that I have one flat side to use, then lightly dip it in my color or brush on just a little and sponge it on. I would go light, because you can always put on layers to make it darker if need be! That is what I have done!
Good Luck!