would you guys like to go more in-depth on the pros and cons of race specific armors? both from a game-design view and in-game (i guess player) view on racial armors? like if you would expand on your example Stabbey with loot-balancing, why does it make loot balancing more of a headache if its racial armors?
It should be obvious. Instead of "Great! This armor is good for a warrior and I'm a warrior", it becomes "This armor is good for an elf warrior... but I'm a dwarf warrior. It's no good for me. Now I have to look for other armor drops and hope that I get one that is both for my race and the role I am trying to fit." Instead of just one condition which the armor needs to meet before it can be good for you, it needs to meet two conditions. It's the difference between odds of 1 in 4 and 1 in 16. In a game with finite loot available, a satisfying loot system is very important.
If you can alter the armor in some way, say, having to take it to a smith, that does solve the loot balancing problem, but it adds an unneeded extra step which gets between You------>You-in-Cool-Armor. Especially irritating if you would need to stop in the middle of what you're doing and go all the way back to town.