[mwcard=DNQ07] Veteran's Belt[/mwcard]
happens after the roll dice step. The creature ability isn't defined in the complete codex, the FAQ or the Warlord v. Forcemaster rules, so the answer to this question isn't completely well defined, but the Critical entry in the Complete Codex says
Critical Damage (Game Term) Critical damage bypasses Armor (Armor does not reduce the damage dealt). Critical damage is shown as numbers inside a starburst on the attack dice.
From this I conclude that we resolve attacks with the critical trait so they cause critical damage, the same as if the starburst die face were rolled in step 3.
At the end of that step, the belt then may convert up to 2 of that critical damage into normal damage. The normal damage is then modified by armor, as usual. Any critical damage remaining ignores armor.