I was just fiddling around with shield other, as I'm currently playing a very tanky character. and I believe that I may have found the sollution, since the wording is as it is.
the spell distinctly say: "the subject takes only half damage from all wounds and attacks" and then goes on to say: "The amount of damage not taken by the warded creature is taken by you". so what if I can't take the damage? say, if I have a mystic shield on me for instance (anouroch p.142). the spell shields me from all magic effects of level 6 and lower.
this should mean that the target of the shield other should still only take half damage, but the damage never gets to me. easy-peasy.