Well, it implies this. But it doesn't cover the strengths and weaknesses of armor. One of the arguments you see often around these parts is that EH == stam, and stacking stam is the way to go no matter what. And barring that, armor sometimes has value simply by being mitigation, even when it's not the optimal EH choice (think armor trinkets vs stam trinkets as an example) due to allowing lower HPS on the tank. That does get shaken out by the spreadsheet, but most folks aren't going to look at the spreadsheet - and they're certainly not going to look at it in that kind of detail.Mess around with the survivability spreadsheet, it covers this.
Going back to the discrete sequence of bad events vs overall damage for PEH+MEH - I guess I didn't say it well enough. The implication from your paragraph is that sometimes you'll want to do that (figure out what the worst sequence of events is) but in my experience that's about the only value in EH calculations. Figuring out how much overall damage you take at a time and what percentage it is doesn't really help when determining targets for me, especially on hard fights. Tanks nowadays don't die because of attrition, they die because of burst.