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I thought I would put this on here cause I had the same issue as a lot of people. I spent a bunch of time last night dueling so here's my two cents.
The biggest key is the BLUE AND RED BARS on the side of the screen. If your blue bar is smaller than their red bar, you lost no matter how many shots you take.
Drawing first gives you a boost to the bar but apparently less accurate shots. Letting them draw first gives them the boost but your shots are more accurate. I never noticed any real difference in accuracy. Draw first to get the little boost to your bar.
When it says draw, use L2 or down then up on the RS. This will bring up the cross hairs for you to target them. Now you move the RS to where you want to shoot them. You can paint them with the RB or the RT, it works both ways. Now WATCH THE CROSS HAIRS, they will flash red to white...red being not a good shot or no shot at all, and the smaller and whiter they are when you paint them, the more accurate the shot and also affects your blue bar, so watch the bar when you paint the target.
You don't need to unload your clip either, if you want to do one shot, just do one shot but the key is that your blue bar has to be larger than their red bar with that one shot. Paint the targets, watch the bar and then just wait for the dead eye to end, and as long as your bar is bigger you win.
Disarming them gets you like 100 fame and 200 honor. Just target their shooting arm and that usually fills your bar pretty full.
Hope this helps...just feel free to add comments and enjoy dueling. One more thing, easy way to build fame and honor with dueling is this. Get the Elegant Suit from Thieves Landing so you can cheat at poker. Find a low buy in game, usually 10 bucks. Attempt to cheat and let them catch you...instant duel. Disarm them in the duel and there is your 100 fame and 200 honor. Go back to the game and repeat.
Well like I stated, drawing first gives you a boost to the bar, if your bar didn't go up, you did not paint it properly. Make sure the cross hair is small and white when you paint his arm, but make sure you actuall have the cross hair on his arm too and not to the side of it or smoething....if done properly you will see the blue bar make a huge jump. Doesn't fill the bar but gives you more than enough to beat the guy your dueling.