I think the problem doesn't stem entitely from the armor system. People are simply accepting the fact that crowd control has to be such a large aspect of the game, but why? There are something like 30 hard crowd control spells in this game, and that is simply too much. Having that many crowd control skills causes the need for some convoluted armor system in the first place.
This might be blasphemy on a cRPG forum, but look to MMOs for ideas. Modern MMOs have severely limited the use of CC abilities, and I think that's the right move. Right now each character in your party will have at least two CC abilities, but probably closer to three or four with little effort. That's 12 - 16 total CC abilities, which is absurd.
I say a mod that did the following would go a long way to balance the game:
1. Absorb physical and magical armor into health, as an average. So a character with 500 health, 150 physical, and 100 magical would have 625 health.
2. Remove a large number of hard crowd control effects from abilities and items. A dedicated crowd control character should have three different abilities max. Most characters would have one.
3. Every character is immune to hard CC during the first round.
