Thesis statement: Shields are bad at low levels, and more importantly, feel bad to play. We can make shields better and feel better by making making a number of small changes.
Author's note: This is a new system and like most I've yet to inter every single minute detail into my consciousness. If you see any errors or omissions, please voice them so I can make changes to my post.
Rules regarding shields:
Bards, Clerics, Druids, Fighters, and Paladins have natural proficiencies with shields. Bards may only use Light Shields, Druids may only use Wooden Shields.
Light Shields give +1AC and +1 TAC. They have Light bulk.
Heavy Shields give +2AC and +2 TAC. They have One (1) bulk.
Wooden Shields give 3 Hardness.
Steel Shields give 5 Hardness.
Shields give no benefits unless the wielding character uses the Raise Shield action. Shields have a Check Penalty of -1, which is not affected by its item quality (unlike armor). Items (including shields) can take two dents before becoming Broken. A broken item cannot be used further unless repaired.
(one action)Raise Shield
You position your shield to protect yourself. When you have Raised a Shield, you gain its listed bonuses to AC and TAC as circumstance bonuses and you can use the Shield Block reaction. Your shield remains raised until the start of your next turn
(reaction)Shield Block
Trigger: While you have your shield raised, you take damage from a physical attack.
You snap your shield into place to deflect a blow. Your shield prevents you from taking an amount of damage up to its Hardness-the shield takes this damage instead, possibly becoming dented or broken.
In essence, then, I can take one action to gain +1/2 armor and block 3/5 damage. If I take a second dent while blocking damage, I can no longer gain the +1/2 armor bonus. The trigger for the Shield Block reaction is "...you take damage from a physical attack.", so I could potentially choose to use the Shield Block AFTER I see the damage roll (this is my interpretation of the rules, I'd like clarification).
This means I should always use Shield Block if the damage I take is below the hardness of the shield, as it's not at risk of being dented/destroyed. At low levels this makes Steel shields infinitely more useful, as the likelihood of taking 2 damage (the maximum damage you can take without denting a wooden shield) is extremely low. Characters (IMO) should never use Light shields unless 1 bulk is important, or use Wooden shields unless they're a druid. Wooden shield users should probably never use the Shield block action more than once without repairing it. This makes Light Wooden Shields pretty useless.
Higher Level Shields:
Unlike magic armor, magic shields can’t be etched with runes granting potency or properties. All magic shields are specifc items with a wide variety of protective effects, as described in their entries.
Pg. 190: Item Quality Table 6-19
Expert Shield cost: 300sp +1 Hardness
Master Shield cost: 3,000sp +3 Hardness
Legendary Shield cost: 6,000sp +6 Hardness
Magic Items:
Sturdy Shields
Type expert light wooden; Level 2; Price 35 gp; Hardness 6
Type expert light steel; Level 4; Price 90 gp; Hardness 8
Type expert heavy wooden; Level 5; Price 140 gp; Hardness 8
Type expert heavy steel; Level 7; Price 340 gp; Hardness 10
Type master heavy steel; Level 9; Price 675 gp; Hardness 13
Type master light adamantine; Level 10 (Uncommon); Price 1,000 gp; Hardness 15
Type master heavy adamantine; Level 12 (Uncommon); Price 1,800 gp; Hardness 18
Type legendary heavy steel; Level 17; Price 14,000 gp; Hardness 17
Type legendary heavy adamantine; Level 18 (Uncommon); Price 22,500 gp; Hardness 21
Unfun: Paladin/Fighter/Cleric and Bards get nearly identical shields. At low levels, the Sturdy Light Wooden Shield and Expert Heavy Steel shield are almost identical (+1AC vs +1Dent). P/F/C pulls ahead at levels 7 and 9, but at level 10 the Bard again is on even footing for having the best shield available to him. This also applies to regular armor-Magic Light/Medium armor comes faster than magic Heavy armor, removing some of the value of having higher armor proficiency.
Higher Level Shield Proficiencies: Paladins and Fighters get increased training in Shields. Fighters eventually get Master armor prof, gaining another +2AC from armor, and +2AC from shields. Paladins get a +3 bonus instead. Those multi-classing into Paladin can spend two feats to get Shield proficiency and Expert armor/shield training. Seems good.
Shield Feats and class abilities:
While Druids, Clerics, and Bards have access to Shields, they have no access to shield feats outside of multiclassing. Of the two remaining classes, Fighter and Paladin, Fighter gets the bulk of the feats while the Paladin mostly gets +2 dents and Hardness from Shield Ally, and the rest of their feats are trying to fix the fact that Retributive Strike and Shield Block are both reactions.
Conclusion: The best shield user is a Legendary Crafter Paladin/Fighter multi-class with Quick Repair, Shield Ally, Shield of Reckoning, Quick Shield Block, and Shield Champion. With this build you can Shield Block allies, and then Retributive Strike the enemy twice per round. Your shield has 5 dents before it breaks at 23 Hardness, and you can repair a dent in a single action. Your shield also provides a +5 bonus to (T)AC. A Fighter (with no multiclass) can take Quick Shield Block and Shield Paragon to trade a hand for increased defenses. Aside from that, every other shield user is better off getting access to the Shield cantrip or doing something more useful with their hands/actions.
TL/DR and Suggestions: Paladins have a hard time of it because Shield Block and Retributive Strike are at odds until level 10 or so. They should have some way to fix this as early as level 2 IMO. Maybe replace those garbage Oath feats. Bard and Druid really don't need shield proficiency, they don't have any synergy with it and it's not terribly well tied to either class's fiction (I'd sooner see a Barbarian with a shield than a Bard). The differentiation between Light/Heavy and Wooden/Steel is just too much complication for zero benefit.
I'd be fine with a single 'Shield: +2AC +1TAC 5 Hardness' option, where you add half your level to the hardness and item quality gave +3/6/9 hardness on top. Get rid of the Sturdy Shields and just have cool stuff like the Lion Shield and Indestructible Shield. Allow dents to be removed between fights without a skill check. Fighters and Paladins should both have access to 5 dent shields.