On October 24, 1995, at 1524 central daylight time, an Aerospatiale ATR 72-212, N263AT, registered to AMR Corporation, and operated by Simmons Airlines as flight 3588, on a Title 14 CFR Part 121 scheduled domestic flight, experienced an inflight fire on the #1 engine while on approach to the Dallas/Ft.Worth International Airport, Texas. The airplane sustained minor damage and there were no injuries to the 4 crewmembers or 64 passengers aboard the airplane. The flight originated in Oklahoma City, Oklahoma, at 1459. Visual meteorological conditions prevailed and an IFR flight plan was filed. According to the operator, approximately 30 minutes short of the destination, the left engine experienced a 20% loss of torque. The flight crew contacted their maintenance operations center (MOC) and informed them of the cockpit indications they were experiencing. Company MOC informed the crew that they might be experiencing a possible fuel nozzle leak on that engine. As the captain was discussing the possibility of an engine shut down with the first officer, the #1 fire warning light illuminated and the fire horn was activated. The captain secured the engine, and discharged the #1 fire agent. Immediately following the discharge of the fire suppression agent, the associated warning light in the fire handle and condition lever were extinguished. At 1554 the airplane landed on Runway 13R at DFW Airport, with emergency equipment standing by. After clearing the runway, and stopping on the high speed taxiway to confirm that there was no engine fire, the airplane taxied to the ramp where the passengers deplaned without further incident. An inspection of the #1 engine at the ramp did not reveal any thermal damage to the exterior; however, cowling removal revealed physical evidence of thermal damage in the aft section of the engine in the area of the lower turbine support case. Two flexible fuel drain lines were found fire damaged and replaced. The 14 fuel nozzle assemblies, and the associated 144 "O" rings (Part number ST3367-009) were replaced. One "O" ring on the #3 fuel nozzle was found separated, and two "O" rings on the #12 nozzle were deteriorated. The system was leak tested following reinstallation and no fuel leaks were noted. Testing at the engine manufacturer facility revealed that the inside diameter of the copper gasket used at the fuel drain nipple (Part Number 3023431) was found to be 30 to 40 percent larger than required. This oversize resulted in misalignment when the fitting is tightened, resulting in leaks. The engine manufacturer issued service bulletin P&WC S.B. No. 21416 to replace the oversize gasket with one with a smaller inner diameter made of corrugated stainless steel (Part Number 3122594-01). The operator issued a Fleet Campaign Directive (FCD) to modify the affected airplanes. The engine manufacturer is currently developing a redesigned fuel nozzle/manifold system for all the PW100 series of engines. A copy of their proposed system is enclosed. According to the operator's maintenance records, the fuel nozzles were last replaced on July 3, 1995, at 6,855 hours. The upper flex line at the overboard drain mast had been previously inspected (boroscope) for blockage/clogging on September 27, 1995, at 7,343 hours, as per the operator's FCD # E2-71-001R2. A review of the operator's maintenance practices, as well as the installation and inspection procedures involving the fuel distribution system for the PW127 engines were reviewed Federal Aviation Administration inspectors. No anomalies or deviations were found.