That being said, I love the new system for everything outside of that one small detail. It makes each fight feel meaningfully unique in that at the start of each fight I have to plan how to take down each mob individually based on both their defenses and resistances.
That "at the start" is the problem. The fight loses meaning once armor is gone. It's questionable why health exists if once it's gone you're just gonna CC the enemy, or be CC'd yourself, to death
Actually, this is what happened in the first game at any given moment of a battle. The Physical Armor bar was introduced in order to counter the omnipotence of CC spells in the first game. And it worked fairly well in these regards.
What doesn't work are the shields. On that I can agree. A shield wielding character at the present is definitely subpar compared to any other melee build.
To address this issue I've already proposed 2 possible solutions:
1- Reintroducing the block mechanic of the first game (not that elegant)
2- Changing the physical armor bonus of shields with a flat damage deflection value. This value, of course, should scale with the shield level. In other words, I'm suggesting to make shields work exactly like weapons, except for the fact that - instead of doing damage- they should deflect a fixed amount of damage per hit.