One problem with extremely high AC builds (and monsters) is that they eventually hit a wall where the opponents just dump everything into power attack anyway. If you need a 20 to hit anyway, you may as well PA away your entire BAB.
Still, what kind of campaign is constantly throwing dragons at the PCs? I don't know about anyone else, but I see plenty of equivalently-levelled humanoid enemies in the 15+ range. Not to mention undead and aberrations (generally poor attackers who thrive on their special attacks), outsiders (good attackers but with significantly higher CRs relative to their hit dice), and constructs (generally poor attackers with extreme defense).
If the typical encounter is two cloud giants and a venerable white dragon, then sword and board is (somewhat) less effective. If the typical encounter is two human fighters, a hobgoblin monk, an ilithid and a hobgoblin cleric, then sword and board is quite valuable.
Also, the further you move from core only, the more valuable sword and board (and two-weapon fighting) become relative to two-handed fighting. There aren't a whole lot of THF feats and PrCs available; on the other hand, feats like shield specialization and superior equipment like that in Arcana Unearthed can skyrocket a sword-and-board fighter's value.
For example, here's a 10th level human fighter using armor from Malhavoc's Arcana Unearthed and the Shield Focus and Shield Specialization feats from AEG's Feats.
Human Fighter 10
AC: 39, up to 50 when completely on the defensive
Attack: +13/+8 (2d8+5, 19-20, x2)
Equipment: +1 Defending Bastard Sword, +2 Amulet of Natural Armor, +3 Definitive Harness, +3 Articulated Long Shield
Feats: Monkey Grip, EAP: Def. Harness, EAP: Articulated Long Shield, SF: Articulated Long Shield, SS: Articulated Long Shield, WF: Bastard Sword, GWF: Bastard Sword, EWP: Bastard Sword, WS: Bastard Sword, Combat Expertise, Superior Expertise
Now, a glance at some CR 10 monsters is instructive. First is what the monster needs to hit our fighter (with or without expertise); the second is what he needs to hit them (without expertise).
Colossal Animated Object (needs 14 or 20, hit on 2/3)
Couatl (needs 20, hit on 8/13)
Demon, Bebilith (needs 20, hit on 9/14)
Dragon, Red Juvenile (needs 15/20 or 20, hit on 11/16)
Dragon, White Adult (needs 16/20 or 20, hit on 13/18)
Formian Myrmarch (needs 20, hit on 15/20)
Giant, Fire (needs 19/20 or 20, hit on 10/15)
Golem, Clay (needs 20, hit on 9/14)
Hydra, 9-Headed Pyro (needs 20, hit on 6/11)
Hyrdra, 11-Headed (needs 20, hit on 8/13)
Naga, Guardian (needs 20, hit on 5/10)
Rakshasa (needs 20, hit on 8/13)
Salamander, Noble (needs 16/20 or 20, hit on 5/10)
Slaad, Grey (needs 20, hit on 11/16)
Monstrous Scorpion, Gargantuan (needs 18 or 20, hit on 11/16)
I'd say that looks pretty darn good. It also scales, courtesy of Superior Expertise. At 20th level, this character could easily have an AC in the 70s while concentrating on defense, perhaps enough that the tarrasque would need a 20 to hit him.
His AC could easily rise by 21: +10 from superior expertise, +4 for improved armor and shield enhancements, +3 for improved natural armor amulet, +4 for improved defening weapon