Further thoughts on rewriting 3.5. In an ideal environment, where ToB style weapon damage is the norm, double the DR granted by manufactured armor and introduce the Improved Toughness feat.
Damage Reduction: Whenever you are dealt damage from any source, be it a Troll's warclub or a Necromancer's shadowbolt, if you have Damage Reduction, abbreviated as DR, you ignore some of that damage. Some DR is overcome by special materials, others by special damage types, and still rarer some DR cannot be overcome by any means. Damage Reduction always has a given value, such as DR 5 or DR 30 and anything that is able to overcome the DR is expressed after a "slash" like so: DR 8/electricity or fire.
Armor of all kinds, including Natural Armor, grants Damage Reduction of a value equal to the armor bonus to AC. Different types of Armor grants DR which can be overcome in different ways.
Padded grants DR X/acid, fire, piercing, slashing or sonic.
Leather and Studded Leather grant DR X/fire, piercing or sonic.
Chain Shirt grants DR X/bludgeoning, cold, electricity, force or sonic.
Hide Armor grants DR X/adamantine or fire.
Banded Mail grants DR X/adamantine or sonic.
Chainmail grants DR X/bludgeoning, cold, electricity or force.
Scale Mail grants DR X/adamantine or electricity.
Halfplate grants DR X/adamantine or electricity.
Plate Mail grants DR X/adamantine.
Armors that come with an attached helmet (Hide Armor being the notable exception) are protected against sonic attacks. Damage Reduction granted by armors made from adamantine or dragonhide/scale are no longer overcome by adamantine weapons. Other special materials may be able to shore up the weaknesses in an armor's DR in other ways. Natural Armor DR is always overcome by adamantine and if a creature with this DR has an elemental subtype their DR will be overcome by the opposing elements. For example, a Greater Fire Elemental with Natural Armor +8 will have DR 8/adamantine or cold.
Damage Reduction from multiple sources always stacks, however a character is not able to benefit from both a suit of armor and from natural armor at the same time. For example, imagine a Warrior with DR 4/-- as a class feature and wearing a suit of +2 Dragonhide Armor which would grant him DR 5/fire. Against all non-fire damage he has DR 9 and against fire damage he has DR 4. That Warrior could not gain DR from both his suit of armor and from Natural Armor because he can only benefit from one armor bonus.
Damage Reduction, as shown above, can be granted separately from Armor by any number of means (as Class Features, through spell or maneuver effects, magic items, etc).
Damage Resistance: It is possible for a creature to be especially resistant to a single type of damage, be it slashing, electricity, or even force. This resistance is noted as [Type] Resistance X, for example, a Zombie has Bludgeoning Resistance 5 and Cold Resistance 5. Damage Resistance and Damage Reduction always stack.
Revised Feats
Toughness
Prerequisite: Fort +2
Benefit: You gain Natural Armor granting an armor bonus to AC equal to your Constitution modifier. This armor provides you with Damage Reduction of the same value overcome by adamantine. This armor has no maximum Dexterity bonus, no armor check penalty, no spell failure, and does not hamper your movement in any way. This armor can be magically enhanced in the same way that manufactured armors can.
Special: If you have an elemental subtype such as Fire your DR is overcome by one or more other damage types determined by your subtype.
Improved Toughness (For a ToB-style environment)
Prerequisite: Fort +3, Toughness
Benefit: Double the DR granted by your Natural Armor. Furthermore, you have a 5% chance per point of Constitution modifier to ignore critical hits and precision damage.