The problem here is, DnD does not discriminate between armour types.
You could get your AC - and DR - from physical armour, "force fields", spells and so on.
But the source of AC itself is usually irrelevant; only numbers really matter.
Your character could be as heavily or lightly dressed as you envision it to be: your AC 20 could come from plate and shield, or dex and spells, and it would work the same way.
The paladin/monk other players mentioned could be reasonably pictured wearing small bits of armour, equating to cloth, and still maintain a martial appearance.
In DDO you can't do that: your paladin/monk will have to wear robes or outfits.
You can't have it wear overmeshes from, say, leather armour, over a surcoat texture skin.
Also, the issue of tying armour appearance to armour type is really harmless.
If AC worked differently, and DDO had a strong PvP slant, you'd make a solid point, since outward appearance would prove misleading to other players.
In a PvE game, with a strong solo slant, freedom in choosing appearance is really harmless, and only imposes extra limits to players and developers.
I agree that spending dev time only to disappoint your player base, is a waste.
I've come to accept that Lamannia sometimes is a preview server, sometimes effectively works as a test server.
I am hoping the current appearance kit system is just a test, a promising proof of concept, and not a carved-in-stone preview of things to come.
At any rate, as another player correctly mentioned: it is optional.
I'll keep using sub-par gear as city armour for characters who don't need the extra juice.
I'll put up with "ugly" armour as quest gear for characters who need to squeeze out every last drop of dps, AC or mana.
And maybe buy kits when my chars get end-game level gear and they plan on keeping what they wear.