Note this is not a house rule, just how I would have done 4e. I'm not familiar with palladium either. My idea looks similar thematically, only simpler. Mechanically it's really closer to dnd hit points.
Maybe it doesn't. This particular archetype is on par with armored warriors thanks to his incredible brawn and resilience. He would actually last longer in the vat of acid, which borders on superheroic and doesn’t fit every character concept. It may have disadvantages, like not being able to mend his armor.
But then we’re back to abstract hit points
I think you didn’t get it. It’s more simulationist but in practice it’s almost identical to the existing system.
The armour degradation just means losing the additional hit points.
Starting to lose "real" hit points is akin to being bloodied.
Armour mending is similar to healing surges (you can do it in a dungeon, but only so many times before it needs more serious repair)