Ahh, I see, thank you for elaborating! After double-checking - this is actually how reductions to the damage taken by armor work; they're applied to the raw damage *before* the armor's intrinsic damage reduction is calculated.
Oh I see! I was thinking of it as the game doing the D * H / (H + A) first, then * 0.75 afterward. You're saying any incoming damage is multiplied by 0.75 first, then goes through the damage reduction calculation. In which case it's actually 0.75*D * 0.75*H / (0.75*H + A). Mathematically it ends up with the extra factor of 0.75 for the H's but otherwise the same.
In this case then the desc says it's -25% armor damage taken, but it's actually much more powerful, because the *0.75 is applied twice in the numerator. That's somewhat balanced out by the 0.75 in the denominator, but not completely due to the A term. Hence in this case, an Eagle taking a harpoon hit, it actually reduced the damage by 34%, from 900 (without Impact Mitigation) to 595 (with Impact Mitigation). So it's actually pretty good. In fact -25% is actually the limiting case where armor is 0; the higher the armor value, the more Impact Mitigation does, up until the armor is 425% of the incoming damage, where the H / (H + A) "bottoms out" at 15%, and so Impact Mitigation actually reduces the damage by 41% at that point. After that it gradually decreases in effectiveness (due to the 15% minimum), until the armor is about 567% of the incoming damage, when the damage hits 15%, so it goes back to reducing the damage by 75%. For much of the range Impact Mitigation actually decreases incoming damage by around 35-40%, i.e. you actually only take around 60-65% of the damage compared with if you didn't have Impact Mitigation. (I'll post a graph later that explains this a lot better I think.)
I don't know if there's an easy way to change the desc to eliminate this ambiguity though, since against hull, this only affects the hit strength H and not the actual damage D. "-25% incoming damage against armor"? It might look similar to the current desc "-25% armor damage taken" at first glance but "taken", being the past tense, implies something applied afterward, as opposed to reducing the incoming damage. Probably needs a better wordsmith than I to see if there's a way to clarify what it does easily, or just leave it as-is.