The less hits you require to kill someone, the harder it is for you to get any effect from increasing your damage.
Similarly, the less hits you take to die, the harder it is to get any surviving hit gains from STR/IF.
While thats absolutely true, it's not a good idea to just leave things at that and say "once you're able to 2 shot, until you can 1 shot, any damage increase is pointless." There are just too many other factors that come up in a real scenario that this doesn't speak to such as: distance, positive or negative speed bonuses, armor values, variable hp amounts, multiple damage sources (both before and after getting shot.) We have already established that ranged get the lowest damage:kills ratio(meaning that the hits it takes to kill, are almost irrelevant since most people will be dying to another's hand) on average. Still, I'm not trying to say this isn't important, I think about this fairly often, but mostly from the other direction.
As your example shows, at lower damage values, the more hits it takes to kill someone for each point in damage lost. Bringing armor into the equation should make it easy to see how balance at low PD values such as 3, 4 or 5 (if using a lower damage bow), can have serious drawbacks.
I could definitely get behind the IF thing if 1) 18 had the same effect as what we have now, 2) it affected
all stun/staggers(not just from ranged) by reducing the duration by something like 10~ms per IF and 3) I thought there was any hope to ever having a wse update that would make this possible.
