KILLING THE UNKILLABLE:
These two, in combination, should make any creature killable, as a missing head or body is fatal to all enemies. Blobs and Zombies will eventually be hacked in half, while Colossi and Skeletons will eventually have their bodies or heads shattered. If you want to go further, Zombies' brains should be considered vital according to the most common interpretations, meaning that a red or cyan wound to the brain should disable them.
BALANCING WEAPONS:
This leaves piercing and blunt weapons basically without a purpose.
For piercing weapons, this is an easy fix. Currently, a weapon's strength considers the size of the weapon, the density of the material, and the sharpness of its edge. The contact area of a weapon in comparison to its size and weight should also be considered: the lower the contact area in comparison to its size and weight as a ratio, the more power it should have on piercing attacks. This means that piercing weapons should have a much higher chance to puncture armor and bone (and piercing vulnerable organs underneath) than a similarly-sized slashing weapon of the same material. A wooden sword may never pierce an enemies skin, but a sharpened wooden stick (a wooden spear) can do so easily.
Blunt weapons tend to have a much higher contact area. Against "solid" enemies like Bronze Colossi and Skeletons, all attacks should basically be considered blunt - capable of denting, fracturing and breaking, but not able to hack or cut or pierce. Contact area should have a large positive impact on the likelihood of breaking, making blunt weapons ideal for these sorts of enemies (and piercing weapons useless). This may be breaking with physics a bit more than my other suggestions, though.
In short, piercing weapons will be best against humanoid targets, blunt weapons will be best against brittle targets, and slashing weapons will be the most well rounded as well as the best against Blobs.
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I thought these changes should help balance the weapons appropriately while making it possible to kill anything via combat, even though it might take three hundred dwarves to do so. Thanks for taking the time to check this out.