These critical hits are reduced in number by one for each two factors of armor the target ship has; round odd numbers down.
I'm sorry Mike, but this is another nail in the argument.
With this rule, and under your interpretation of the Surface Explosion table, that means that Critical Hits are affected by armor - twice. Armor gets to double dip with Crits.
First by denying them in the first place (via the DM on the SE table), and second by directly affecting the number of Crits.
That doesn't seem very "fair".
The Armor DM does not negate the hit itself, it negates any internal damage caused by the hit. The hit still happens, and dings the door and hammers the gong. It just doesn't break through. Higher armor makes that resistance more likely (just as one may feel armor should). An armored target will take less internal damage than an unarmored one, but armor does not necessarily "reduce" the damage, it simply makes it more unlikely.
While the hammer may not break through the shell, the ship is still rocked by the blast. The Captain, First Officer, and the helm crew are grabbing their consoles as the camera is tilted. "That was close" one of them may exclaim. From these ship rocking moments, crits happen. It can even be argued that the higher armor level represents overall structural integrity of the hull, which is why higher armor mean for less crits. But the crits still weaken the ship. Hit it hard enough, enough times, and even the thickest armor loses its integrity.
In the past week, we've had an pretty good earthquake storm. There's been 18 small quakes near by, and we've felt 15 of them (which is a record for us to be sure, its been a rockin year compared to 1 felt per year before this). Scaring the cats, rattling the house. "None" of them have broken through my well built, wood framed house. They've been bouncing off my plywood sheeting wrapped house, thankfully.
But, one of them rolled a crit.
A small piece of back splash tile popped off wall. (Trust me, if you saw my wife's expression, this was, indeed, a "Crit"). A bit of silicone glued it back in place.
But a critical hit indeed, with no actual penetrating damage.
Crits are the "concussion" protocol of HG combat. No matter how good your helmet, get hit in the head hard enough, enough times, its going to have consequences.