To the best of my knowledge this is how PV functions in ADOM II:
On normal hits: damage is reduced one point per point of PV
On 80% of critical hits versus the PC: damage is reduced one point per point of PV and then multiplied
On critical hits versus monsters (and 20% of the time versus PCs): damage is multiplied and then reduced one point per point of PV

One problem with this system is the massive gulf between normal hits and critical hits versus monsters. Against something with high PV, you might not be able to do any damage on normal hits and kill it with 2-3 critical hits. Late in the game this leads to irritating combat, since you need critical hits to make any progress. This is exacerbated by the higher critical hit multipliers possible. Even against the PC with more favorable damage calculation, critical hits do absurd damage. It makes late game combat unpredictable to the point where you have to heal every time you drop below ~500 HP.

I'd suggest having PV reduce damage by a percentage, rather than a flat amount. It could multiply damage by a factor like 25/(25+PV) (i.e. 50% damage reduction at 25 PV, 67% at 50 PV, 75% at 75 PV). This would at least ensure that x5 critical hits do x5 damage and not x100 damage. It has the side effect of allowing weak monsters to actually damage the PC (arguable whether this is a negative). A downside to this is that it diminishes the effect of powerful/mighty blows for barbarians (although these are absurdly risky for a PC to use currently).

Was considering making this a RFE, but since PV is a central mechanic and my solution isn't that great, I'd be very interested in hearing what the community thinks first.