You do not need to tell me that women are capable of beating men in a fair fight. I have long since argued against narrow-minded men who cannot comprehend the possibility that a woman might be stronger than them.
Fairynuff! Though it's not just 'stronger', oftentimes a combattant can be weaker but (over)compensate with something else, e.g. nimbleness or cleverness (which are the cliché comparative strongpoints of women). Which brings me to...
But the point I am making is that if a woman has to resort to 'distration' techniques, then she is portrayed as rather desperate and not particularly capable.
This I would actually contest. To me at least it does not send that message at all. It's simply one method just like any other, and as the example showed, there wasn't even an actual need / desperate situation for her to do it, she simply chose to. Because she could . If anything it says something about the men that fall for that kind of tactic
If her actions were a taunt, however, then this doesn't apply, but since you previously asserted that this could be used as a distraction, I was addressing that.
I did? Well I wouldn't bet my life on it in her position, but then I wouldn't be particularly attractive either and all I could count on would be the humour effect at best, which has been scientifically proven to be less effective than the 'drooling idiot effect'.

Anyway, in the context of a fantasy universe it's not that outrageous a concept I think. In reality, of course, it would be far too risky. And definitely too cold. Brrr.
That said, I'm not even a fan of bare boobs in any case. A pretty form-fitting, complimenting armor for my Femquisitor, however, is something I'd kill for, and I wouldn't necessarily use the argument of distraction in that case either.
PS. +1 to SardaukarElite. "Armchair breast generals"! And you are making a VERY daring assumption