You're generally right.

My own impression is:

- armour always works, regardless of conditions on the battlefield (for armour-piercing effects, see below)
- shield bonus always works from the left and front sides; against missiles they seem particulary effective*
- defense skill: I think, but am not entirely sure, that it decreases with fatigue. I suspect that if a unit is charged from the rear the defense skill will initially not apply since the unit has its back turned towards the attacker.

Armour piercing effect partially counters the defense bonus from the enemy's armor with an attack bonus. In the first Medieval: total war it provided roughly 1 attack point for every two points of armour. I'm not sure what the formula in RTW is.
For comparison: Hetairoi and Hellenic cataphracts are very similar units; the only stat difference is that Hetairoi has less armour but compensates this with extra defense skill, leading to an equal amount of "defense points" total.
Since both the primary and secondary weapons of these cavalry units are armour piercing, the Hetairoi will most of the time win against Hellenic cataphracts.

*there's been speculation that a shield bonus of +1 is actually more effective then +1 armour when countering missiles in general. I'm not entirely sure if this is the case. Another theory is that when a missile hits, the hit-chance is first calculated against the shield bonus and secondly against the armour. Whichever is the case, shield bonus works tremendously well against slingers. A unit that has both decent armour and a decent shield (3 to 5 points) is well protected against all forms of missiles.
Units with big shields but very few armour, like those Celtic spear militias, are very vulnerable to decent archers. Conversely, a unit with no shield but with decent armour (like Prodromoi) are more vulnerable to slingers than archers.
Units like cataphracts, i.e. no shields but a tremendous amount of armour, are practicly invulnerable to archers and only somewhat vulnerable to slingers. More armour is still better as far as enemy slingers are concerned.