I don't know how it was then or how it is now, but that's not the case for version 0.7.9.4.
The hit chance and damage dealt are all calculated in the "CombatRoll" passage. Armor penetration does not actually reduce armor, but rather increases your damage. (So it'll still say an enemy soaked 30 damage regardless of whether or not your weapon has penetration, but you did deal more damage to him than otherwise.)
For the first enemy (the one in slot 1 of the enemy formation):
Armor | Bonus Damage |
38+ | 7 |
25+ | 5 |
14+ | 3 |
9+ | 1 |
For all the others, it only takes into account the bottom 2 rows (so a max of 3 bonus damage).