On damage reduction when blocking with weapons, blocking mechanics and more:
Active Blocking stacks with Damage resistance from Armor, being applied to any Damage that makes it through, and is capped at 85%. When you have 100 Blocking, the following happens:
- Daedric Shields block for 63% Damage resist
- All weapons block for 60% Damage resist
- Iron Shields block for 56% Damage resist
About the Shield Wall perks: the perk descriptions in-game are incorrect. Each level of the perk adds 10% to Blocking, which is multiplied against skill in the same fashion as Fortify Blocking enchants. For example, if you have 60% Damage resistance (unperked) from blocking, then each level of the Shield Wall perk will add +10% to that base 60, meaning that each level will add a total of 6% Damage resistance. Basically, the Shield Wall perks are +10% Fortify Blocking enchants. A quick look at the table above shows that 4 ranks in Shield Wall is enough to hit the cap (and then some) for Daedric Shields, and will give 84% (pretty close to the cap) for all weapons... but an Iron Shield will need all 5 levels of Shield Wall to hit the cap.
Blocking with zero skill or perks:
- Daedric Shield 53% (rounded)
- Iron Shield 50%
- All Weapons 42%
So we can see that the blocking mechanic is inconsistent for weapon blocking when compared to shields. At low skill levels, weapons are inferior to an Iron Shield, but better at higher skill levels.
Nearly all Blocking perks work with weapons... the only ones that don't are: Arrow Deflection, Elemental Protection, and Shield Charge. Block Runner works just fine with weapons, and will even supercharge your stealth to make sneaking happen at running speed. As a side note, doing a "shield bash" with a 2H weapon instead does dramatically more Damage than properly using a shield, and the Bashing perks work fully as intended with regards to blocking with weapons.
Bashing Damage stats (rounded up):
- Daedric Warhammer : 7 Bash / 21 Power Bash / 102 Deadly Bash
- Daedric Greatsword : 6 / 18 / 90
- Iron Warhammer : 5 / 14 / 68
- Daedric Shield : 5 / 14 / 68
- Iron Shield : 3 / 8 / 38
Tl;dr: Blocking with weapons is nearly as effective as blocking with a daedric shield, and it takes the same investment to reach the damage reduction cap.
Taken from http://www.gamesas.com/topic/1342463-complete-character-design-freedom-damage-resist-caps-and-ridiculous-damage-thread-10/, which may be slightly spoilerific in places.