[dmm]

I think you're missing my point. (But maybe not. See below.) The warheads are so heavy that ArmorIII does more damage to the enemy ship.
ArmorIII:5x10kT=50kT weight and does 5x70kT=350kT damage
Warhead(II?):50kT weight and does 300kT damage

Having slept on it, here's my answer to my own question (which maybe is what Psit. meant?):
1) Warheads are faster than armor to put on a ship as an upgrade because they're only one item. (Heavy items don't take any longer to repair/upgrade than light items.) So if my Yard can do 5 repairs/turn, then in one turn I could either turn one outdated escort into an armored rammer, or I could turn 5 outdated escorts into 5 warhead rammers. So if I'm in a hurry, then warheads win, no contest.
2) A warhead rammer that's down to 5 strength in the warhead and 5 strength in one engine can still sneak up and ram the enemy, doing the full 300 damage. So the enemy is forced to destroy it totally. An armored rammer down to 10 strength will only do 10 damage, so the enemy doesn't need to worry about it. (And if the enemy has EmissiveArmor or CrystalArmor, then he can ignore damaged armored rammers at even higher strength levels.)

One thing I've learned from my discussions about armor, is that new technologies are often not as good as a high level of an old technology. But if you keep researching to higher levels of the new tech, eventually the new tech has significant advantages.