I use ToroHealth Damage Indicators to see damage done and current health on mobs. On stealth attacks wooden daggers report 5 damage but reduce mob HP by 4 health. Diamond daggers report 8 damage but reduce mob HP by 7.

This was tested on cows, sheep, spiders, and zombies. The armor on zombies reduced both the reported damage and actual damage (so the problem still existed).

I checked it and realized the damage indicator you are using can't show comma numbers and the damage gets increased by 1.5 :)
In the next update I increase the number to 2.0

Ohh, gotcha. Thank you very much for looking into this =D