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The way I handle it is:

-Normal Armors range from 1-5 AC
-Masterwork quality armors can add 1-3 points of AC to this
-Armor + (Max Dex/2) = 5+masterwork level. So your Masterwork Plate that has 8 AC will have max dex 0. Your masterwork chain shirt with 4 max dex will have 6 armor.
-You gain damage resistance equal to armor value, this amount is multiplied by bonus attacks from BAB (was made for 3.x, scaling can be tied to something else)
-Damage resistance applies per round rather than per hit. So if you get hit by 5 arrows for 10 points of damage each, with resistance 10, you still take 40 points of damage. 


There's a few other details in the armor design, but that's the core of it. This way makes high dex characters have more AC, and thus be harder to hit, but heavy armor characters get hurt less when they do get hit. It roughly balances out.