The more damage a shield takes, the harder it becomes to block with it.
I think I see where you are going with this part but it sounds counter-intuitive for a game. I mean, keeping track of equipment is already a task, but having an equipment that constantly drains away its usefulness could be tedious. And may lead to a meta where players always ditch them for one with less damage, or even stop using them altogether.
Then again I'm imagining the shield going from 100% to 0% effectiveness in line with how damaged it is, which may not be what you intend. You did say player skill would make it easier to block with a very damaged shield. However this is the one piece that is supposed to be different and not "boring"