You're correct on both counts. Using a shield means sacrificing damage for defense, which is already problematic. To add insult to injury, however, their defensive value is highly
questionable. Certainly, early on, a wooden shield can be a great boon. But, the amount of damage it blocks is fairly low; and worse, it will break, very fast, against anything after the UT (and some things IN the UT). Broken shields are pretty useless. Using a stronger shield, such as iron, means it will function better as a shield, and last longer before breaking - but in exchange, you are stuck with a substantially heavier item with a correspondingly worse accuracy, which impacts it's ability to actually block.
Using shields made of mid- and late-game materials helps alleviate this conundrum (Do I block, and have it do nothing? Or do I not block, and have it matter when it happens?). However, by the time you get there, you can usually parry comparably well with an offhand weapon, or simply avoid the damage altogether.
It comes down to a common difficulty in building IVAN characters - tanks don't work. The game mechanics conspire to make defensively-minded equipment sets generally ineffective.
Welcome to the forum! Glad to have you. It sounds like you've got a good head for mechanics on your shoulders. I hope you stick around