As a general rule, when using a marksmanship build you should NOT gem armor penetration until you are already getting a significant amount (about 750) from your gear.
The thing about Armor Pen is that it scales well - so while you may find that after a certain point stacking agility no longer benefits you, armor penetration will pick up the slack. Until that time, you should gem ONLY agility. there should be delicate cardinal rubies in most of your slots. You should have 1 Nightmare Tear in so that you can put a Relentless Earthsiege Diamond in your meta slot. Everything else should be Delicate Cardinals. Once your gear is already giving you significant armor penetration, gem ArPen instead.
Also, research your talent builds. You might be wasting some points in places where they don't belong. Research glyphs as well. You can use my profile as a point of reference, since I have followed this advice myself with excellent results. I currently reach over 5k dps unbuffed, which has me doing over 50% of group damage in most heroics and between 7-8k with full raid buffs. This is not massive dps, but is high when you consider my gear. I dps above my gear level.
Also mind your rotation. It's better to think of it as a priority though. Your current rotation stinks! This is the correct priority for marksmanship hunters:
First, all targets should be hunter's marked and serpent stung. If another hunter doesn't already have them marked, mark them yourself. Cast serpent sting before beginning your rotation. Here is the correct priority:
Kill Shot - Chimera Shot - Aimed shot (for single target) or Multi-shot (for multiple targets) - Steady shot until something else comes off cooldown. You can keep Arcane shot in your rotation (right after aimed shot) until you have about 350 armor pen, at which point you will start getting more damage out of your steady shots.
Also, you may want to take a second look at your gear. There is plenty of mail out there that is meant for shamans. It might have critical strike rating on it, but it's also got caster stats which you don't want. You want as much agility, armor pen and critical strike/attack power as you can get. our hit rating will take care of itself as the "correct" gear will have hit on it. It is hard to not go over the hit cap. Don't worry about haste as it is more important for hunters to hit hard than it is for them to hit fast.
Finally, try making macros for your shots. My shots are all macroed to cast kill command, cast rapid fire and use both trinkets. This way whenever any of those abilities comes off cooldown it is being used without my having to cast it manually.
