Natural armor per AE and Istarian lore:
So what are thick scales providing "excellent defense in physical combat . . . offering better protection than the majority of the armors of the Living Races use"? It seems reasonable to apply to biped body armor (not Armor teched armor and not Armor jewelry). Of course, it is likely that most pieces of biped armor will have the Armor tech (especially when tripled teched). However, that seems to be by intelligent design for such a compounding armor bonus. The order of armor of the living races goes from Cloth/padded, Hide/leather, Ringmail/chainmail, Scalemail/platemail. To me Scalemail seems a fitting comparison, "so named due to its resemblence to dragon scales if offers protection only surpassed by platemail with lighter weight and greater ease of movement."- (IG racial bonus) Armored Scales: Dragon scales provide excellent defense in physical combat. Scales mature as dragons progress concurrently giving them more protection.
- (Character description, Special Ability) Armored Scales: Dragon Scales provide excellent defense in physical combat. Scales mature as dragons progress concurrently giving them more protection. This is an innate ability and requires no action.
- (Character description, lore) A Dragon?s skin is covered with thick scales, offering better protection than the majority of the armors the Living Races use.
Okay, levels 21, 41, 61, 81 comparisons then
Dragon 21 is 184 armor = 80 natural armor + 20 hardened scales + 84 armor (hoard)
Dragon 41 is 409 armor = 160 natural armor + 40 hardened scales + 164 armor (hoard) + 45 (adult)
Dragon 61 is 545 armor = 240 natural armor + 60 hardened scales + 200 armor (at 50 hoard) + 45 (adult)
Dragon 81 is 645 armor = 320 natural armor + 80 hardened scales + 200 armor (at 50 hoard) + 45 (adult)
Biped Scalemail with no shield, no mask, and not Armor teched:
Ironis 305 = 25 helm, 25 chest, 25 belt, 25 legs, 25 boots, 70 shoulderpads (2), 28 sleeves, 50 bracers (2), 25 gauntlets, kenaf 7 cape
Steelis 522 = 46 helm, 46 chest, 46 belt, 46 legs, 46 boots, 92 shoulderpads (2), 46 sleeves, 92 bracers (2), 46 gauntlets, 16 cotton cape
Cobaltis 810 = 71 helm, 71 chest, 71 belt, 71 legs, 71 boots, 142 shoulderpads (2), 71 sleeves, 142 bracers (2), 71 gauntlets, 29 silk cape
Mithrilis 1134 = 100 helm, 100 chest, 100 belt, 100 legs, 100 boots, 200 shoulderpads (2), 88 sleeves, 200 bracers (2), 100 gauntlets, 46 ironsilk cape
Edit: Corrected math on iron, oh these numbers are coming from the outdated Official Strategy Guide
In summary, if the numbers are correct, thick scales providing "excellent defense in physical combat . . . offering better protection than the majority of the armors" are seriously lacking:
Dragon at 21 is 121 behind (corrected math)
Dragon at 41 is 113 behind
Dragon at 61 is 265 behind
Dragon at 81 is 489 behind
So without scale jewelry (not innate) and very difficult to achieve hoard levels (51 to 100), Dragon natural armor falls behind VERY fast compared to unteched scalemail. Shields are not considered because they are not body armor and their contribution to armor should only be against 1 to 3 monsters (the other monsters should easily bypass the shield's effect on armor). Masks are just strange as an aspect of armor (invisible more so). Armor from jewelry will be comparable - dragons have 10 slots (at 90, 7 at 60) to the 7 biped jewelry slots - maintaining the overall status quo.
Solution 1: Adult ability beginning at level 40 of + 4 armor/level (retroactive to level 1). Another + 2 armor/level upon attaining Ancient (retroactive). This is per lore of "innate ability" as dragons mature so no quest needed. So to compare, adult is + 164 at 41, + 244 at 61, and + 324 at 81.
Solution 2: Armor at 6/level and hoard armor bonus of 2/level (closer to Official Strategy Guide's Armor of 6/level, but it did not mention hoard). Adult + 4/level at 50 (retroactive to 1) and Ancient + 2/level (retroactive to 1)
Dragon 21 is 182 armor = 120 natural armor + 20 hardened scales + 42 armor (hoard)
Dragon 41 is 407 armor = 240 natural armor + 40 hardened scales + 82 armor (hoard) + 45 (adult)
Dragon 61 is 809 armor = 360 natural armor + 60 hardened scales + 100 armor (at 50 hoard) + 45 (adult) + 244
Dragon 81 is 1029 armor = 480 natural armor + 80 hardened scales + 100 armor (at 50 hoard) + 45 (adult) + 324
This should be comparable at level 100, but don't have reliable numbers for that high.
A note on hoard and armor - "Dragons seem to feed (in the figurative sense) off of the size of their hoards, giving them added power." I find it hard to understand how armor is connected to hoard size and feeding off of it. Is it inspired by fantasy literature? Hoard powered Silver strike and Gold rage use hoard for extra melee power. Gold shield uses hoard (an expensive defense, especially due to weak natural armor) for defense power. There are no hoard powered spells. Again, though, game design related to lore I don't understand (as in why are not the other statistics or skills based on hoard size besides armor and breath weapon damage?).
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Will edit as needed when more reliable armor numbers are known.
Edit 1: Corrected Iron