IMO the most elegant solution to this is to give every item in the game, for their level, a random minimum and maximum roll to defenses.
Each stat (phys/magic armor) now has an independent -50% to +50% rolled for each level.
I kinda have a very dim view of a system like that in a game with finite loot, finite money and finite chances to get equipment. We can't keep playing until we get a decent roll on equipment, and -50 to +50 is huge.
