What is really sad is that this formula give absurd results while being needlessly complex.
It could be made much better by being simpler and more intuitive.
Like just having a part of armour acting as direct reduction and then applying a percentage one. Could make the three types of damage working in very different ways, while still being simple and logical.
For example :
Cut having the highest damage but being the most affected by armour.
Blunt does little damage, but is not much affected by armour (due to it already being a rather inefficient form of damage that spreads the energy on a large surface, so spreading it around even more is harder).
Piercing does average damage, is the most affected by threshold (piercing weapons tend to have less mass and kinetic energy, and to damage something with piercing you need to breach the outer casing first), but once the armor is pierced it's the less affected by armor.