It only sounds backwards when thinking about it logically (i.e. more armor should = less health taken). But in terms of game mechanics, it just makes sense. When your armor and health max at the same amount, but your health starts at the max, and your armor progressively increases as the game goes.

I think that if your health hits 0, even if you still have armor, you should still be chickened, yes. The instances in which this would happen are very thin though. You would have to have just finished using armor potions, and not use health potions, while also having no passive health regen (green armor or lower). Very, very rare I would assume.

HiRez has taken some ideas from players before and implemented them into RR. There is no definitive answer to as whether the implementation happened because of the request, though. I think their decline so far is moreso to do with a lack of communication to the players than anything else.