But the Penetration system doesn't fix that problem. Daggers just as easily have their penetration buffed over the initial break point as any other weapon, and they have very similar values of the stat as compared to other weapons anyways. In fact, when you really think about it, POE1's system actually did a better job of addressing this hypothetical because a full suit of armor was actually generally worth something in most situations. Flat DR means lower damage weapons, like daggers, have a more problematic time against higher armor targets. Penetration means that any weapon can work in any scenario as long as you have the pen to reach the break point, meaning it actually CREATES the scenario you describe.
Of course, the thing is, Penetration wasn't built to do what you say it does anyways. It was part of Pillars of Eternity's wider effort to "demurk" mechanics to make them more clear. Penetration's function is certainly more clear, but that's only because it's incredibly simplified. Since there are only two break points for damage, it means damage on hit is generally very predictable, which was the intention. You've only really got three kinds of damage you can get on hit: next to no damage, normal damage, or tons of damage. This makes combat very readable and predictable, as in, it makes it easier to understand what's going on at any given moment and ascertain where the flow of combat is headed. Moreover, it makes decisions on who attacks what easier to parse.
But although that's a benefit, it came at the cost of meaningful equipment choice. Armor and weapon upgrades are inherently less meaningful in a system that doesn't consistently reward statistical increases. The simplified damage profile is nice, but meaningful choices are at the core of great RPG design, and are far more important to ensure as a result. The Penetration system is fundamentally flawed because it compromises on this concept, and even the overhaul I mentioned doesn't really address the problem because it just moves to a compromise between DR and Penetration (which is still a massive improvement from both systems, but still doesn't achieve the goal the Penetration system was designed to meet, and even the base Penetration system compromises on its own ideas a bit with scaling underpenetration). What really needs to happen is that there needs to be something that can create a simplified damage profile without robbing individual point investments of meaning.
I'm not sure what such a system would look like or be based upon, but I'm definitely going to brainstorm on it a bit and get back to you. I believe that there is some type of solution here.
EDIT: Okay, I came up with a theoretical solution, here's my idea. Not saying it's necessarily a good one, though I think it's a nifty suggestion, and open to a lot of nuanced tweaks needed to address any potential issues that occur during testing. Also, it addresses your hypothetical scenario a heck of a lot better.
- Penetration is removed as a stat.
- Instead, each individual attack either with a weapon or a spell will have a value called "Attack Strength", which will be an average of the lowest and higher possible damage number of a given attack.
- When that attack is used, the Attack Strength is compared against the target's Armor Rating. If the value is positive, the damage will be normal. If the value is negative, the damage will be severely reduced.
- Either way, that final value will be added to the damage calculation. This value will only be added to the final damage total, after a critical hit is processed (if one occurs).