I don't know that passive damage reduction is a good solution - it could create problems down the line. Rather than that, I'd like to see paladin and warrior get a little closer to each other in effectiveness while maintaining their distinct play styles. That way you could choose a paladin OR a warrior as your main tank and basically just have it be up to the player's preference.

Raising Paladin damage on a single target to within like 75% of a tanking warrior's would be a good start. That could be done with looser combo conditions, buffing Flat Blade a bit (damage wise), or something else entirely. Leveling out GLA and MRD HP would be good too. Warrior still gains, Paladin still loses, but the gap isn't as wide.

That would leave us with Warrior, who has higher damage (but not insanely higher like now) and AOE damage (which paladin has none of), and Paladin, who trades AOE and some damage for shield skills and some healing.

Also this really should be in the paladin forums. I've seen the flat mitigation suggestion a lot there .