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And no, the Dreadnought doesn't instantly kill you. But it can do way over 200 damage on higher levels. As for Armor, it's very ineffective at preventing damage. The difference between 10 to 20 or 20 to 50 is not worth the upgrades.
Even on hazard 5 a dreadnaught melee hit doesnt oneshit you if you have around 350 HP or more ofc..
One thing to keep in mind is that what you should be doing throughout stage 5 is clearing a large area, not gathering resources. You need a large enough space for you to dodge and not get slowed down by mining or anything else. That's generally a good idea throughout the other stages too, since it lets you create a large clump of enemies you can circle around and farm for XP. Useful against most elites too.
Plus, as mentioned, armor is not a useful pickup. I'm not sure if anyone has found the math on what it actually does, but it blocks way less than you might think. If you get a choice between +12 Armor and +3 Crit Chance, take the Crit Chance.