i think you should leave on the shield value because it works against arrows... but you should also add the same amount the shield distracts instead of adds to the defence value. Adding it to the armour wouldnt be that smart because it would greatly improve the effect of armour piercing units. Because the shield bug distracts points in their defensive ability and they will die faster i think that adding points to the defensevalue is good because they can now better defend themself...
But adding the shield value to defense skill will make things unbalanced for auto-calc. With the changes i've already made to unit balance in LTC(2handed bug workaround, light cavalry no longer able to route armoured sergeants, heavy cav toned down in the charge, spears good against cav), i do not think the shield fix is necessary.