For players it should just be a resistance to the element (and immunity should never be achievable).
I think immunity to an element is fine, although it should be more difficult to achieve.
The resistances from armour might be capped to, say 85-95%, and the last few points to immunity might have to come from spells or potions. Would also make those spells and potions more important.
I wouldn't totally remove immunities since there are e.g. a few parts in the game where immunity to an element is an alternative way to reach certain places.
Healing through resistance >100 is something that could indeed be nerfed a bit (either restrict it to elementals, or reduce the effect enough for it not to provide such large amounts of healing) - esp. since late-game it's easily possible to get above 100 resistance in several elements on multiple characters.