eamon
Explorer
I would think dwarven armour is better - its a free action and a free surge. Sure its just once a day, but how many times a day does a given player need to use the cloak of the walking wounded?
Particularly the "free action" aspect is really critical: for most characters it's attractive to delay healing until the last moment: and the dwarven armor lets you take that risk and saves you when it goes wrong. Conversely, the cloak for non-dwarves is pretty uninspiring: most characters will (rightly) choose to avoid a second wind as long as they possibly can, and if you wait too long, you may end up dropping without ever getting a chance to use the cloak.
There's another factor here, which favors the armor; that's that players usually win safely anyhow. Mostly, deaths are attributable at least partially to bit of solidly bad luck. Abilities which allow you to mitigate a few bad rolls mean you're much less vulnerable to that kind of thing. The players' need for a buff isn't constant. A weaker but more flexible buff can easily turn out superior to a stronger but less flexible buff. In that sense, things like the elven reroll, couters of second chances, and luckblades all work quite well - It's often not a problem to miss and just attack next turn; but sometimes the tactics are such that hitting now is very important. Similarly with healing, the ability to heal when you need it is quite powerful.
Oh, and let's not forget the level difference too; the armor is in the attractive 2/7/12 etc block, whereas the cloak is in the expensive 4/9/14 etc. block; so by choosing such a highlevel item, you're paying with your defenses 3/5 levels rather than just 1/5 levels.
Cloak of the Walking Wounded doesn't need banning.