I disagree with 1.
In general, I don't like relying on 'diminishing returns' formulas. I would rather have both Armor and Resistance be a flat reduction in damage, or a percentage reduction in damage. Otherwise it's very hard for me to know what benefit I am actually getting when I get +50 armor/resist. I'm not certain what the formula is behind armor, does anyone know?
Solving the resistances problem is pretty straightforward - just limit what stats you can get from what equipment.
Only allow resistance on Chest, Ring, and Necklace. Each of which is capped at 30% resist for one element, or 10% resist for all.
I thought about what you are saying, but I think soft caps are better than hard caps. Also, do we then remove the resistances from all spells like Fire Shield or Immune to Burning to preserve our hard cap? The rating system, while somewhat vague at first, incorporates all of the game's existing mechanics.
