Exactly: Instead of level scaling with bullet sponges and HP, level scaling should be with armor. Non penetrating hits to HP damage to simulate bruising and exhaustion. Penetrating hits would do massive damage. It allows you to scale enemies simply by adjusting the loot list. At level 1 the space pirate is in a jump suit. At level 15 he has a Kevlar vest that can shrug of small arms, but only mitigates a fractions of the damage from 5.56. At level 30 he has an AR500 plate on his vest so center of mass shots with the 5.56 aren't going to do the job and you need to concentrate on head shots to do extra damage.

It also brings up an interesting dynamic where you have weapons that do a shit ton of HP damage, (hollow points and baseball bats) but don't penetrate worth a damn. So if an unarmored target gets hollow points, and moderately armored target gets FMJ. Finally when you get to super heavily armored targets you might want to switch back to the high impact/low pen rounds because nothing you have is going to penetrate anyway. Hitting a guy in an AR500 vest with a sledge hammer isn't going to penetrate, but kenotic energy it will probably break his ribs and put him out of the fight.

Any time the player has to make choices it is a good thing. Anytime there is one best weapon for all situations games tend to suffer from a sameness after multiple plays. If a year from now we have hundreds of threads arguing about what is the best weapon or armor then you know the designers did their job.