Yeah. When I talk about Paladin being the king of damage reduction, I'm referring to O.chain. It turns Paladin into a small god of damage reduction.
The fSTR calculations aren't broken. They're a concession to 1H weapon users and a bandaid that inhibits overcamping at low levels and helps Paladins tank Mandragoras in Kampf gear. Your insistence that something is wrong with them make me think you don't understand how they work, so here goes:
(Your STR - Target's VIT)/4 + 4 ~= fSTR, at high STR values relative to VIT.
fSTR caps at (Weapon Rank + 8), where Weapon Rank = Floor(Weapon Damage/9)
(Weapon Damage + fSTR) = Base damage
So for low damage weapon users (like Paladin), Joyeuse +20 STR (35 ~+6 Damage = 17%) is a much larger increase in damage than for a Warrior with Perdu Voulge +20 STR (96+~6 damage = ~+6%).
The opposite is true when a Paladin is tanking a monster. High VIT (- base damage) is good against monsters with low starting base damage that hit frequently (like Mandragoras). VIT doesn't matter so much against things with high base damage (like almost everything after level 60).
I definitely agree that this mechanic doesn't have a large impact on endgame, but the obvious alternatives I see are:
1) Make negative monster -> player fSTR subtract damage. This could be done Phalanx-style, or using the current -Base damage tyle.
2) Make negative monster -> player fSTR manifest as percent decrease in damage taken, like PDT but not affected by the cap.
Pick whichever you like, adjust it however you like, and you'll probably be more durable (and so would everyone else) but you haven't changed Paladin's situation at all.
This is not a new problem in the least, and none of the damage-taken mechanisms have changed. If there weren't level 90 monsters when we were 75 (the easy ones, like Genbu) then we wouldn't have had such a hard time DDing them. If you'd lowered the monsters between level 85-95 down to level ~82, I doubt that Paladin would ever have become popular. Now we fight monsters that are realistically probably ~5-7 levels above us. How quickly would a level 82 Tiamat have died to a few SAMs?
The problem is not in the job, it's in the lack of massive level-correction (and thus damage-resistant) monsters. I sure don't miss the old days, but I'm sorry you guys lost your house.