The AR bonus is for the physical side of things, as elemental damage does not miss. If you hit an enemy with say Ice Arrow you then have a chance to pierce the monster depending on your level of Pierce (not Penetrate) skill. If the arrow is successful then it does damage to that monster, attacks the next monster behind. The arrow will do the elemental damage and then have the same chance to pierce that monster as well, and so on and so forth. If your chance to pierce the first monster in line fails, that attack is done, no chance to hit the monsters behind.
Note: Iirc some monsters are immune to freezing even though they are not cold immune. I think Blood Lords fall in this category.