Depends on the armor. There are quite a few links about body armor in this thread, I suggest you read them.
100% true. Rifle rounds are usually much faster than handgun rounds due to the greater length of rifle barrels compared to shorter guns. Penetrating power doesn't entirely rely on the round's speed, though. Anyway, the body doesn't need to absorb all of the bullet's kinetic energy since when hit without body armor, the bullet will usually not stay in the body. With the larger calibers though, getting hit by one of those ensures there won't be much left of you to be recognized, due to the massive kinetic impact, as you pointed out. That's not what body armor is designed to protect against however, since larger calibers are used mostly against vehicles. And it's not like the militias in Iraq have plenty of .50 Barretts to play with.
No. Penetration ammunition will not fragment upon impact. It's designed to resist the impact and be strong enough to go through whatever protection layers it's designed to defeat. Consider that when a bullet is fragmented, the individual fragments will have a much lesser chance of penetrating due to less kinetic energy, oblique trajectory, and irregular shapes. In that respect, penetration rounds are less 'damaging' than hollow point ammo.