Vulajin's testing (
here) seems to torpedo any multiplicative theory (as a multiplicative factor can't totally remove your chance to crit), and strikes some pretty decisive blows to the crit-rating conversion theory. I think, in absence of evidence to the contrary, we have to assume that it's a flat crit reduction of 4.8%.
There's still questions of what classes of attacks this applies to; my preliminary testing indicates that rogue yellow attacks are subject to the same 4.8% reduction, while poisons (and, presumably, all spells) suffer a lesser reduction of around 3%.
The speculative theory in the rogue threads at the moment is that there's a global 3% crit reduction on boss level mobs, affecting all incoming attacks of all sorts; however, physical attacks are subject to an additional .6% per level penalty based on boss defense. However, as this is largely speculative, additional testing would be required to confirm it.