I'm assuming Assault Missiles from the new Falcon expansion will also damage friendly ships at range one of your target, correct? Asking because this will limit it's use at least a bit.

Here is an image of the card from afewmaneuvers.com:

That is correct. Any and every ship at range 1 from the defending ship would take 1 damage, friendly, enemy, or some neutral 3rd party (possible in a future scenario perhaps?).

Follow up question… Does the target ship have to be within your firing arc to to use assault missiles (or, can they be used on anyone within range if you have a target lock)? I'm guessing they have to also be within your arc since it doesn't say otherwise.

They need to be within your firing arc. Even the Falcon with a 360deg primary weapon can only fire it's secondary weapons within it's forward 90deg firing arc

Thanks for confirming. Then, I'm not sure what all the fuss is about. Given they (1) cost 5 points -- making them one of the most expensive upgrades, (2) require a target lock, (3) work only at range 2-3, (4) require the target locked ship in your 90 degree firing arc, (5) require that you actually hit the targeted ship -- and you've already spent your target lock so you can't reroll, (6) that the targeted has to have one or more ships within one of them to really be worth it -- otherwise, there are cheaper alternatives, and (7) that they also effect friendly ships that happen to be near the target, these do not seem over powered to me.

The fuss is because, under a very specific set of circumstances, they can potentially deal a very large number of total damage. If they somehow manage to hit every TIE in an 8-TIE swarm that's at least 8 damage dealt with one attack (and that would only require one of the 4 attack dice to not be canceled… they have the potential to kill one TIE and take out 1/3 the hull of every other TIE). I'm not that concerned, but that's what's worrying others.