For me, one problem is that Armor is way too powerful, to the point where you're already fighting uphill if you're even thinking about health restoration. At this point, it would be very hard to fix. It's not that the game overall is imbalanced, but shields are so much more powerful than heals at this time.
Maybe heals could be buffed and maximum health could be buffed, and/or some sort of limitation on maximum shield values could be put in place based on stats, skills, and/or equipment. As it stands now, you can pile a bunch of shields on a glass cannon and get the best of both worlds, as long as you don't get focused too hard.
Maybe Hydro could have "3% of health restoration is added to target as Magical and Physical armor" per point, for example.
Another possibility to consider with the above - change it so that CC effects check for Armor *before* the skill deals its damage. In this scenario, smaller shields would still be highly valuable. DoT effects would receive a natural buff as a consequence, so what I'm proposing would have far-reaching implications for various balance issues.
