Actually, I like that.
Something like, you get +1 protection -- a DM-1 to be hit -- for each letter code above your hull's letter code. Each letter code of armor is a flat tonnage. And armor ablates one level when penetrated.
Ye cats, I like it.
What might that flat tonnage schedule be? It would have to be enough to make a Trader think hard before installing armor. So a 200t Trader wouldn't normally sacrifice 20 tons for armor, but he might give up 10 tons. So somewhere in there.
Therefore, how about this:
(0) (Assumed) Hull Volume = A=100t, B=200t, C=300t... up to Z=2400t, then we get fancy.
(1) Armor Volume = use the Jump Drive Volume table. So, same schedule as jump drive letters. Maybe cheaper than jump drives though?
(2) Armor DM = amount by which it exceeds the hull code. So Armor C on Hull B = 20 tons, DM-1 to hit.
(3) Armor is damaged when the ship takes damage, i.e. when armor is penetrated. Damaged armor still takes up its alloted volume.
Boy, that's beautiful.
Although, it seems like the DMs could get out of hand. But, I bet they don't actually. Plus a natural 12 always damages armor, right?