After having outfit my military with high quality all-candy gear, I observed more injuries than usual. I dug through combat logs and some old forum posts and came to the conclusion that candy being so light, it really does jack to protect against the weight of weapons. Yes, everything gets deflected, but wearing cork armor means that the impact of these weapons creates way more damage to the body underneath compared to heavier shaped armor, such as steel.
I did a couple of arena tests to confirm this:
First 1v1 test:
Silver Warhammers for each, as well as highest level Armor, Weapon, Discipline, Fighter skills.
Dwarf one, in full candy armor, died 14 times.
Dwarf two, in full steel armor, died 6 times.
Second 1v1 test:
Iron Short Swords for each, as well as highest level Armor, Weapon, Discipline, Fighter skills.
Dwarf one, in full candy armor, died the first 10 times.
Dwarf two, in full steel armor, after having won 10 times, was declared a clear and early winner.
Worthy to note is that at low skill levels, the test result was inverted:
Second 1v1 test, repeat:
Iron Short Swords for each, as well as 'skilled' Armor, Weapon, Discipline, Fighter skills.
Dwarf two, in full steel armor, died the first 10 times.
Dwarf one, in full candy armor, managed a flawless victory.
Also note that I left shields out, as well as the skills governing shields, dodging and the various unarmed techniques.
It is possible that the dodging skill benefits from less armor weight. Maybe I'll append this.
My reasoning and conclusion:
In both tests, I saw a fair number of deaths by strangulation. This means the dwarves dealt blunt damage to each other until one was down, then the other finished the job. In the first test, we see Dwarf two scoring some kills. Silver warhammers are heavy enough that no armor is impervious and steel won't fully protect you, but it did better than candy.
In the second test, I gave the dwarves iron short swords to simulate the kind of combat scenario you see a lot in sieges. Gobbos bring copper and iron gear. The swords weren't able to get through either armor, but the weight of the weapon dealt sufficient blunt damage to the dwarf in candy gear, while the steel gear was heavy enough that it didn't result in any appreciable damage.
The third test highlights the importance of armor weight and exhaustion in relation to armor skill.
This means that yes, candy armor is overrated and may even be 100% inferior to steel for all combat cases. Except for particularly bad luck with a FB composed of weapons-grade metal, the enemies don't have steel or candy. For an end-game militia with high-grade steel gear, sieges usually result in injuries when the dwarves get overwhelmed, surprised, blunt damage'd or by the odd chance of bad luck with non-blunt weapons. FB and other beasts trouble the dwarves mostly through syndromes and special attacks. As soon as you reach steel tier defense, basically getting your armor penetrated becomes a non-issue. Only in armor weight and dwarf speed does candy show a clear benefit.
TL;DR: Keep your steel armor on. Consider candy mail shirts to save some weight and leave it at that. Consider candy armor also for recruits and low-skill militia. The better your dwarves' armor skill is, the less you gain from using adamantine over steel. Steel has more well-rounded material characteristics because weight matters for protection vs. force injuries.