No, Ataraxic89, that is exactly how guns work and kill people.
There's no need to penetrate armor to kill someone (if you want to make sure -- check why the most knights died in midage battles for example).
If you think that "the ONLY thing that kills you is blood loss" than you lack not only the knowledge of what fireams do (which is OK, but not welcome if you advise how to make a realistic game even more realistic) but you lack the basic knowledge of physics and biology which sucks.
Anti-aircraft guns such as ZSU-23 that were used in Afghanistan during the Soviet-Afghan war proved that with big caliber you don't need to hit some vital organs in order to kill someone instantly. I suppose you will find enough data about it on the internet.
And do not compare the kinetic energy of a pistol round with assault rifle's round -- there is a huge difference.
I'm not saying that hydrostatic shock is the only reason people die because you can't say "there is only one factor that kills people and all others do not have effect". I just say that there are many factors that and many effects (hydrostatic shock, blood loss, vital organs damage and many others) that has to be counted to do a proper damage system.