Going to play the devil's advocate here.
It doesn't matter that if it's "balanced" or not. It matters that it makes 'sense' more than anything.
What are you going to trust to stop a great sword coming at your left side that you can't evade? A flimsy parrying dagger, or a tower shield? Lol. Something should be done about shields, regardless. I find it absolutely pointless to have one because one blade apparently = +5 ac (enchanted tower shield?).
If we are talking about "making sense," there is a reason why shields were less commonly used towards the late medieval period, after the introduction full plate armor, and why halberds started to become very common. Also, in terms of making sense, a 45 lbs tower shield is not really something you can lug around in combat or use to parry blows with to much effect. Historically, they were almost exclusive used by archers and more commonly crossbowmen to reload/redraw behind. And there is a slew of other historical inaccuracies and mistakes in both DnD and NWN.
Were I to suggest anything, I would suggest adding % immunity based on the weight class of each shield. 5% for small, 10% for large, 15% for tower shields. They should make up for that weight instead of just shoving it into a magic bag when you're done using it at the very least. If this is the case with some shields already, I have no idea, but some input from a Developer would be nice.
This is also an excellent idea, and I like it a lot, though this would not require any feats. A lot of people seem to be fixated on the number of feats the parry build requires and my pointing out that feats are cheap here seems to be falling on deaf ears.
You may be of the opinion that feats are cheap, but it is one I disagree with. With how high DCs can get in PotM, how important having access to expertise and even improved expertise feats can be, and especially if you are a spellcasting class that wants to use metamagic or class specific feats, feats can actually be quite tight. Currently my shield using character has 15 feats, and I don't have power attack, cleave and skill focus: listen even though I want them because I don't have feats to spend on those.
Were I to suggest anything, I would suggest adding % immunity based on the weight class of each shield. 5% for small, 10% for large, 15% for tower shields. They should make up for that weight instead of just shoving it into a magic bag when you're done using it at the very least. If this is the case with some shields already, I have no idea, but some input from a Developer would be nice.
I stuff my armor into a magic bag when I am done as well, or my weapon for that matter. Shields are indeed heavy, but their weight is nowhere near unmanageable, especially if you use a chitin shield.
I think you are overestimating how much more damage a two handed weapon user gets over a shield user. Assuming 30 str and comparing an enchanted bastard sword and enchanted greatsword, the greatsword only does 8 damage more per hit on average, and the shield gets one to two more points of AC. 30 str is quite high and not accessible to many characters. A more commonplace assumption would be 24 str, and it is also likely that +4 enhancement will be available for most high-end situations, which brings the damage advantage of the greatsword over the bastard sword to 5.5 damage per hit on average. Considering a single point of AC can potentially halve the damage you take, and you spend one to two feats and 20 skill points less on the bastard sword, it sounds like a very fair trade to me. Not to mention, you get +1 to all saves from an enchanted shield, and there are magical shields in the game, including the strongest DR item I am aware of and a shield with 50% fire immunity and only 18 lbs of weight, I think there is definitely an incentive to go for a shield using build.
As for dual wielding builds, dual wielding requires the investment of at least 15 dexterity, 17 if you want to get improved two weapon defence, as well as at least 4 feats and the usual 20 skill points. If you are using heavy armor, you will likely need 5 if not 6 feats to get the full benefit of parry, and otherwise you will need to invest more into dex. Not only does this stop you from using certain types of weapons, as you want to use finesse weapons, but it also means you have less points to spend on your other stats, and there is the usual penalty to ab from dual wielding. In the end, you do end up with lower ab, often less HP and carry weight, less skill points and considerably less feats than a shield user, and if you are fighting against something with DR, or something with high AC, you can end up doing significantly less damage. As I stated before, I wouldn't mind having dual wielding parry AC cap at 6, but otherwise, it does have steep requirements and certain disadvantages. Again, I can definitely find an incentive to go for a shield using build.
I think trying to give absolute power to shields in the form of AC is not required, they are certainly viable for all the content the server has to offer. I think implementing such changes would make other options too weak compared to shields even. If there must be something added to aid shield users, I would like to see it in the form of utility, such as a shield bash that can give a bonus to knockdown attempts or a feat that makes it easier for a shield user to resist knockdown attempts, or bonuses to certain skills.
On the other hand, small shields are almost completely useless, and large shields don't have much charm as well unless you are a halfling or a gnome. I would love to see something implemented that makes these two options viable at the cost of some feats, and/or skills points.
You're right, the tower shield has more.
By the time the greatsword user peaks at +5, which is very difficult without some dexterity and lighter armor, the tower shield user will have an enchanted tower shield +7 to AC.
You know a lot of people who enchant something that drops when they die? And by level 12 I could get +4 ac from parry, with my character's 14 dex and half plate. Not difficult then to get +5 by lvl 17 without even raising my dex above the 14 it was at character creation. If I wanted to go the 2 handed route, I could get +7 if I raised my dex at lvls 8, 12, and 16, which would still leave my character with 16 strength.
No, you can't convince me that parry isn't over-powered. Which would you rather see? Parry nerfed, or shields be made a bit more worth the added weight and lowered offense?
Saying you can't be convinced that your opinion may not be true is really not a healthy attitude for a constructive discussion.