You are reading things into that statement.
The Elves managed to do fine in the later games. They just had to deal with the more numerous foes differently, and make certain that the Morgul Uruks themselves were kept away from the lesser troops and that their impetuosity was used against them (They would up being massacred by the Elven Knights in two of the games - remember, they don't get the Archer Support if they charge, only when they stand to receive a charge).
As for the Orc's armor status.
Tolkien says that the Orc's armor was Serviceable, although not as high quality as that of the Dwarves and the Elves.
Here are the rule's descriptions of Armored and Protected:
Metal Armor for at least the Head and Thorax (That would be chest, the stomach is the "Abdomen" - although stretching the definition could include the abdomen) - combined, in the case of foot, either with a substantial shield, or with additional metallic protection (The remainder of the definition is for mounted).
With a minimum of at least a moderate sized shield
and/or leather or textile armor. Foot with at limited metallic protection but lacking shields.
Tolkien describes ALL of the Orcs and Goblins as having "Iron Caps" or Helmets. Most of them he describes as wearing chain or some form of armor. That would fit the definition of Armored
. And there isn't an Orc mentioned that doesn't
have a pretty tough shield.
The term lesser quality
has a lot more to do with wear-and-tear, and with not lasting as long.
And not all Elves and Dwarves were encased in Mithril. Even were that the case, it doesn't seem to have done them much good, because they still died by the hundreds of thousands in the Wars of the First and Second Ages for the Elves, and for the First, Second, and Third Ages for the Dwarves (recall that Thranduil's forces at the Battle of Five Armies lost considerable numbers against the Goblins, as did the Dwarves. And they were only outnumbered a bit there).
If you want to represent the Dwarves and Elves as having that significant of Armor, then simply make them Heavily Armored (which they really should be anyway).
Because, by the rules, Orcs and Goblins tend to be at least Protected.
And in the case of the Mordor Orcs, they are still limited to 50% of the army as Armored (at least until 2470, when the Uruk-Hai of Sauron were unleashed on Gondor). Then entire armies of Uruks began to show up, being Armored, and of decent quality compared to previous Orcs and Goblins (at least compared to the Hithaeglir Goblins and Orcs).
If you are depicting Orcs from some other genre, then don't make them armored.
But these lists are composed to represent the armies of Middle-earth, based upon Tolkien's descriptions of the cultures and what little can be found about the armies themselves.
As to "Skilled Swordsmen can't be taken with Average troops..." I can find no rule that says this is the case. Training with a weapon is not identical to Morale and Troop Quality. There are people who are very skilled with weapons who are HORRIBLE soldiers (marksmen come to mind - many of them shoot for sport only, yet have no Military training), and there are people who are superb soldiers with very high morale, yet their skill is only average when compared to other soldiers.
As I said before, that is simply your prejudice, and not anything that could be found in the rules.
Saying "The Army lists don't have any Average Troops with Skilled Swordsmen" is no proof that the capability cannot be used with Average Troops. This is attempting to Deny the Antecedent
), which is a logical fallacy. It is akin to saying "There are no Black Swans in Europe, therefore Black Swans do not exist. Black Swans happen to exist in Australia. Same with Skilled Swordsmen who are average.