Smoothly aiming a object only in one axis.

Questions & Answers
1

How can i aim one object at another only in its y rotation, and dampen the rotation?

3

To make an object rotate towards your target (rather than snap to the target), you'll need to calculate the target angle using Quaternion.LookRotation, then use Quaternion.Slerp to move some amount towards it each frame. Eg:

var target : Transform;
var rotationSpeed = 10.0;

function Update() {
    var targetPos = target.position;
    targetPos.y = transform.position.y;
    var targetRotation = Quaternion.LookRotation(targetPos - transform.position);
    var i = Time.deltaTime * rotationSpeed;
    transform.rotation = Quaternion.Slerp( transform.rotation, targetRotation, i);
}
2

assuming you have your target stored as a Transform variable (edited - forgot it took a direction not a position):

var targetPos = target.position;
targetPos.y = transform.position.y;
transform.LookAt(targetPos);