Medium and heavy armor reduces speed because it restricts joint movement to some extent. If you can't move your legs freely, but rather have to take half-steps, you're going to move slower and more awkwardly. The restriction of the joints, combined with the weight of armor around the arms and legs (especially the lower arms and lower legs) slows the person down and limits their agility. Think about it; in plate armor, you can't bend at the waist, you can hardly pivot at all, you have a short range of movement for your elbows and shoulders and probably even your wrists and fingers, you can only half-bend your knees and hips, you can't turn your ankles or pivot them up or down in those steel boots..... Your range of movement is limited and awkward.
The other thing about a max Dex penalty to AC is that it represents your limited ability to notice and thus respond to attacks around you. When you're wearing a gorget, you can't turn your neck well to look around, and when you're wearing a helmet, your range of vision is likely to be more limited too. That's part of what goes into an armor's Max Dex Bonus to AC. In full plate armor, not only do you have to shuffle around in a circle to keep watch around you, since you can't turn at the waist in such armor, but you also can't turn your neck more than a few degrees, so you have to shuffle-turn your body all the way around in order to see someone lashing out behind you, in your helmet's narrow field of vision, giving you less time to react and try ducking (which's pretty hard in full plate armor anyway, and is more like squatting since you can't bend at the waist or turn at the hip).
In my opinion though, Medium armors should reduce running speed, while Heavy armors should reduce base speed.
In any case, I believe you are mistaken about something; being flat-footed denies you a Dex bonus to AC, but does not say that it denies you a Dex modifier to AC, thus it does not prevent you from suffering a Dex penalty to AC. You suffer any Dex penalty to AC even if flat-footed or paralyzed; it means you're standing in an awkward position or something and particularly easy to hit. The base AC of 10 assumes that a character is going to try moving out of the way if attacked, even if not skillful at dodging, and the base AC also assumes some degree of random chance that the opponent could miss due to poor aim or timing or the like. Someone paralyzed has effective Dexterity of 0, giving them a -5 Dex penalty to AC; being caught flat-footed is no different in that regard, except that you're not paralyzed so you actually may be moving around a bit (even if only shifting your stance while talking or something and oblivious to the rogue hiding in the bushes behind you) so your Dex to AC isn't necessarily going to be -5, because you are moving around a bit and may unintentionally cause the attacker's aim to be off; they may fire one moment, only for you to suddenly turn sideways a fraction of a second later, and their shot passes right where the side of your abdomen was less than a second ago.
Anyway..... Regarding the replacement of Max Dex to AC.... I think it's a bit off. For one thing, armor normally doesn't reduce your Reflex save because, since armor doesn't use the normal rules for cover, it doesn't already block damage directly nor grant a Reflex save bonus; instead, it just doesn't reduce your existing Reflex save modifier. Think about it; in full plate, your max Dex to AC may only be +1, but when a fireball hits you, there are few gaps in your armor where the blast could actually scorch your skin; instead the general heat of the area and the brief, minor heating up of your armor causes you some fire damage, but if you made your Reflex save, it means that you turned your body just enough to avoid the fireball directly washing over your armor's biggest gaps, and you moved your arms in time to cover the few really important gaps like the vision slits of your helmet visor, protecting your eyes, nose, mouth, and such from being burned, though the rest of your body feels like you've been thrown naked onto a stovetop. You avoid any direct burns, but your plate armor didn't burn or melt, so while your flesh may be singed it's still alright and will heal without leaving burn scars. The fireball cooked you in your armor, but didn't really burn your flesh directly, so you're not so bad off; the metal cools as soon as the fireball's explosion has finished. So the fact that armor doesn't reduce your Reflex save is simply a compensation for how the armor doesn't grant you actual cover bonuses to Reflex.
Also, keep in mind that a character's Armor Check Penalty already applies to various movement skills. If you replace Max Dex Bonus with a Dex penalty, you should not apply that to skills. Otherwise you'd have to get rid of ACP too and come up with some other mechanic to reduce Swim checks and other non-Dex skills that are normally impeded by ACP.
