Personally, I prefer subtractive armor to percentage armor or more esoteric formulas for armor effects, since subtractive armor seems about right - it's most effective against weak attacks, and against sufficiently powerful attacks it doesn't matter. There's a reason why, when the world was building battleships, having larger guns and heavier broadsides was such a big deal.
From a purely gameplay perspective, I still prefer subtractive armor to percentage armor or armor whose effect is based off some formula I can never remember, because I can more easily calculate in my head how much the armor is going to do for me against the sort of things I'd be facing. Granted, there are some percentages that are easy enough to work out, but if I had, say, 21% armor, I don't want to have to work out what 79% of the enemy ship's attack would be to see if it's worth my while to unlock this particular ship against the kinds of opposition that I've been facing in the game. I also don't want to have to do silly things like dividing the square of the attack damage by the sum of the attack damage and the armor rating or multiply by some number divided by the sum of that number and the armor rating to figure out how much of an effect the armor on a new unit will have on the attacks it will be facing if I unlock it, and I also don't want to have to 1) have used the ship before to have a sense of how useful it would be in my situation or 2) need to open the reference chart in order to see how the unit I'm thinking of unlocking stacks up against the kinds of units I'm facing (yes, in order to have a good idea of how something will perform, I realize that I need to have used it before, but I should also be able to quickly form an opinion based off of looking at its statistics).
I think the real problem that armor has in this game is that the damage range is so large - we have units that deal a couple hundred damage per shot, and we also have units that deal a couple hundred thousand damage per shot, and a handful that can do millions of damage per shot.
Do note that given two attacks with the same DPS, high ROF is better than low ROF due to overkill. Only because AIW uses subtractive armor is the situation reversed at present. Percentage damage reduction would favor high ROF over low ROF. So if the goal is to make high ROF better against unarmored targets and worse against armor, then we need some subtractive component or an additional step that modifies the effectiveness of the armor based on the attack's damage (for example, 1m+ damage might reduce the armor multiplier by 20%, while 20 damage would leave the armor multiplier untouched).
Percentage armor doesn't have anything to do with favoring a higher ROF over a lower ROF. It will favor a high DPS unit over a low DPS unit, but not necessarily a high ROF unit over a low ROF unit. For example, let's say I had two ships, one of type A, which deals 3000 damage once every 30 seconds, and one of type B, which deals 1000 damage every 10 seconds. Let's assume that I'm attacking ships of type C with each of these ships, and ships of type C have a 10% armor rating. A will do 2700 damage to C every 30 seconds, while B will do 900 damage to C every 10 seconds or 2700 damage every 30 seconds, with the result that A and B have the same performance against C (not considering overkill). If, on the other hand, A did 4000 damage per shot every 30 seconds and B remained the same as before, A will now deal 3600 damage every 30 seconds while B still deals 900 damage every 10 seconds or 2700 damage every 30 seconds. There may, of course, be other reasons to favor B over A, but in terms of performance against armor in a one-to-one comparison, percentage armor does not necessarily favor high ROF units.
Subtractive armor, which we currently have, does a good job of differentiating same-DPS units that have different rates of fire. Percentage armor will not do that.
