What about sword and shield? Would you say thats just as penalized? I usually go for that build.
No, sword and shield is different. The shield provides additional defensive attributes and (enabled) skills. Whether these are useful to you may depend on your style of play. Sword and shield also allows you the option to add additional buffs. However, you will miss out on the additional damage enchants only available to weapons. Two handed can provide additional per hit damage over a single weapon but since it does not provide any additional defensive bonuses, unlike sword and shield, it is similar to dual wield-- there is no reason to use two handed weapons over dual wielding aside from player preference. Unless your options for single handed weapons are limited, mostly in early game, I would always choose two singles over a dual.
I think there were some claims that two handers had greater reach and large damage arc but I never found it to be significant.
