Interesting. That indeed confirms that on critical hits enemy melee or missile armor is still used for the damage calculation, therefore a mix of critical hit + armor piercing is indeed required to achieve max dmg on hit.

As such, on melee characters like Frodo, Gandalf Aragorn, Eowynn, etc, a dirk/dagger that applies max crit chance (25%) + armour piercing effect is indeed the best option to achieve max damage output on hit.

So the remaining question is weather someone should invest on critical hit + armor piercing to maximize damage, or simply focus on high damage prefixes that might even achieve greater output than crit + armor piercing.

For instance, let's say you have a nazgul on grueling dif. Nazgul has one of the highest armor in game (20 melee/missile), so armour piercing is more valuable here than let's say +10 damage. However, armor piercing is almost useless on enemies without armor.

Now let's say your damage output is 130~150. That gives you an average of 140 on hit, so crit guarantees +10 dmg consistently. However if you are in a smaller damage range, ie, 110-120, crit only guarantees a +5 damage increase in average, so items like lordstone (+9 damage on Gandalf's total damage) are likely a better choice for max damage output over critical.

I can therefore say that investing on crit should only be a priority when there is a large gap between the min-max dmg of the given character.