Micromechanics of composites

I think it is possible to use homogenization technique and develop damage models and has been acheived for a number of different composite materials. My PhD thesis was on a similar topic for short fiber composites, including models for fatigue. Below are three relevant papers (in suggested order of reading):

Atul Jain, Stepan V. Lomov, Yasmine Abdin, Ignaas Verpoest, Wim Van Paepegem, Pseudo-grain discretization and full Mori Tanaka formulation for random heterogeneous media: Predictive abilities for stresses in individual inclusions and the matrix, Composites Science and Technology, Volume 87, 18 October 2013, Pages 86-93

Atul Jain, Yasmine Abdin, Wim Van Paepegem, Ignaas Verpoest, Stepan V. Lomov, Effective anisotropic stiffness of inclusions with debonded interface for Eshelby-based models, Composite Structures, Volume 131, 1 November 2015, Pages 692-706

Atul Jain, Jose M. Veas, Stefan Straesser, Wim Van Paepegem, Ignaas Verpoest, Stepan V. Lomov, The Master SN curve approach – A hybrid multi-scale fatigue simulation of short fiber reinforced composites, Composites Part A: Applied Science and Manufacturing, Available online 11 December 2015

A full list of the papers from the thesis can be found in link

A very good point. This aspect requires careful consideration in constitutive modeling of damage in composites or any quasi-brittle material. Strain softening damage, as you mentioned, localizes in a band of a finite width. This width is related to the material characteristic length. This must be captured in a physical and objective manner by the model in order to predict the right energy release rate, and the structure strength size effect. I am not sure if this is captured in the homogenized micro-mechanics approach where the RVE essentially represents the elastic behavior. However, this can be modeled using the recently developed microplane triad model: 

https://appliedmechanics.asmedigitalcollection.asme.org/article.aspx?art...

Further, the below article by Prof. Bazant describes these limitations very effectively: 

http://www.civil.northwestern.edu/people/bazant/PDFs/publicat.pdf

Hope this helps.