My friend is playing a Dwarven Fighter, currently level 3, and has been foolish enough to take my advice with his build. This is what he is working towards. He currently has Str 16 Dex 14 Con 18 Int 12 Wis 10 Cha 8. He is wielding a heavy steel shield and a dwarven waraxe.
1-Power Attack, Dodge
2-Improved Bull Rush
3-Improved Shield Bash
4-(15 Dex) Two-Weapon Fighting
5-Shield Focus
6-Greater Bull Rush
7-Shield Slam
8-Greater Shield Focus
9-Combat Reflexes
10-Improved Two-Weapon Fighting
11-Shield Master
12-Two-Weapon Rend
My main question is, with Shield Master, what all counts as a shield bonus for your attacks? Say you are using a +5 Heavy Steel Shield and have Shield Focus and Greater Shield Focus as above. Your shield is providing you with a +9 Shield bonus to AC, does that translate into a +9 to hit and damage weapon?
Also, with Shield Master where it says you do not suffer any attack rolls made with a shield does that remove the TWF -2 penalty?
I can see your dilemma. I'm struggling with the wording a bit myself.
Shield Mastery specifies that it is the shield's shield bonus (not your total shield bonus) that gets applied as an effective enhancement bonus to attack and damage on shield attacks.
The wording on (Greater) Shield Focus seems to say that you increase the AC bonus granted by shields, not that you increase the shield's shield bonus. However, since that AC bonus is a shield bonus to AC, it might go either way.
The real limiter that I see is that Shield Mastery specifies that bonus should be applied "as if it was an enhancement bonus". Enhancement bonuses to weapons (and armor) are capped at a +5. So, while the feats and enhancement and mundane bonuses reach a +9, enhancement bonuses on weapons (which this shield is now being treated as for shield bashing) cannot go above +5.
Also, since it is being applied as if it were an enhancement bonus (which I would argue means that, for all intents and purposes, it is an enhancement bonus you get for the cost of a feat instead of cash) it doesn't stack with weapon enhancement bonuses.
So, to sum up my ruling, Shield Mastery can give you up to a +5 to attack and damage when shield bashing, and this bonus does not stack with any weapon enhancement bonuses.
EDIT: As far as TWF penalties being removed, I would think that's exactly what it means. It would be a pointless bit of wording otherwise. You only take attack penalties while wielding a shield if you aren't proficient with shields. Since you have to be almost hyper-proficient in shields to even take this feat, I can safely say that it was meant to remove the TWF penalties. However, this removal of penalties only applies to the shield (per RAW, as far as I can tell) and not the other weapon. So you would take no penalty with the shield, and take a -4 with your main-hand weapon since heavy shields aren't light weapons.