I'm of the mind that a mechanic as powerful as taking no damage on every attack should be something very difficult and not necessarily possible for every player to do. If getting the Dodge perfectly only reduced the damage, the system would be perfectly fine as is. But (what I think is, I haven't tested) an all-or-nothing system makes it so that the combat has no danger for a player who has good timing and is too punishing for a player who doesn't. Maybe it can be fixed by pushing those minimum and maximum damage values closer together.
I didn't get the belt of truth in my playthrough! I want to go back and play this game more in-depth, now j know there is a cool item to look forward to! I think if the health number is an item then the current system you have is fine