1.08 bugs.

[AngleWyrm]

It would also be silly if one Depleted Uranium Cannon shell passed through the armor and somehow made it completely useless.

What kind of weapons does the AI have by the time you get organic armor? How much damage will a frigate inflict in one hit?

[Phoenix-D]

That's a balance problem, not a bug.

[AngleWyrm]

Or it could be an implementation problem; the window of opportunity for repair of partially damaged armor is very small during combat--maybe even too small. The benefit of several hitpoints of armor for every incoming shot would be more substantial.

How about a Damage Control Team component? It could use supplies from cargo as replacement parts.

[Suicide Junkie]

No, it is most certainly a balance problem if armor has too few hitpoints to be useful.
The point where the ability fails is also a balance issue, since it is completely moddable.

The fact that the armor must regen to 0% damage before the regen ability recovers is an implementation issue, but it really isn't a problem here.

It really sounds like you're arguing that you want combat to be more like GGmod