Creating chipping effects and/or battle damage is really easy given the medium (paper). Mike advises that you primer your kit first then cut out the zim patterns (they are all precut) and then use PVA glue to place on the kit. Once the zim is on you can create chipping and/or battle damage with a knife as you like. You can even do it before applying the zim but it is probably best to do it after so you don't tear things.
I also do 1/48 models and Kevin Townsend has done a really helpful guide to building a Stug III from start to finish, and he used Monroe Perdu's great zim. So have a look at what he has done and you will get an idea how easy this material is to work with.
Just scrolled down a 1/3 of the page and you will find a full write-up on Kevin's experience using the MP zimmerit. Many others have used it (including me) and found it really easy to work with, producing great looking and realistic zimmerit that you simply can't achieve via other mediums. As I said before, after being a customer of MIke's 1/48 zim sheets I talked him into giving 1/72 a try, and the seeing really is believing. This is just one of those products, like OKBs tracks, that revolutionize how we make good models.
Please remember people, I am not financially involved in Mike's company - Monroe Perdu - at all. I am just helping Mike out with marketing, research, and motivation! Like the rest of you, I just want to have realistic zimmerit on my German AFVs and this is the best product I have found, vastly superior to PE, putty, or molded on plastic zim (like Dragon does). I have a huge stash of Panthers, Pz IVs, Stugs, etc...and they are all going to benefit from Mike's hard work. Mike has done wonders in 1/48 (and 1/35), and now he is working his magic in 1/72!