That's working as intended. High armor makes you harder to hit. A fighter with a tower shield can deflect claws and swords but magic missile will go right through them. Barbarian doesn't get a DR in AD&D, just more HP, because they're tougher.
Working as intended doesn't mean that it's more intuitive compared to the Pillars system. Physical defenses in PoE are separated into two separate layers: DR and Deflection. DR is provided by armor first and foremost and in the case of armor represents how hard it is to penetrate by various damage types. Deflection is provided by the class and various talents and represents the character's skill in using their equipment to deflect/avoid attacks. While DR as a mechanic exists in AD&D, in the case of AD&D armor there is no separation between the pure protective characteristics of the armor and the skill of the character in avoiding attacks: both defensive layers are combined into a single one - AC.
While at first glance this makes sense, especially if we take into account the max dexterity bonus provided by the armor, as the armor itself can be used to make blows glance off its surface, in practice the system is deeply flawed as it does not account for one crucial factor accounted for in PoE: after barrier performance of the penetrating object. In case of AD&D armor, there are only two states of armor penetration: either you got hit and your armor was fully penetrated, or you safely deflected the attack in its entirety without being subjected to any of its physical trauma related effects.
Let me present an example of why this behavior is extremely unintuitive and far more abstract compared to the PoE system. Consider a case where an attacker tries to penetrate full plate armor with a spoon. Sounds comical, but in AD&D this is perfectly possible within the confines of the AC system, because of the binary nature of penetration: as long as you have sufficient attack bonus, you will fully penetrate full plate armor and inflict full damage. In PoE, even if you were to hit the target with the spoon, the spoon would have an extremely low Penetration value and would not be able to overcome the high DR of the full plate, thus having its damage reduced to the minimum possible value - 20% of initial incoming amount. In reality, any blow that penetrates 1mm of steel or even more would penetrate to a smaller depth relative to an unprotected target, possibly not even piercing the skin when the additional padding is taken into account, and would also have a large chunk of its kinetic energy dissipated by deformation and damage-related processes, thus inflicting less harm to someone's well being.
When all of the above is taken into consideration, it is very clear that the PoE system is more intuitive and less abstract.
It's harder to parry stronger blows, they're also easier to penetrate amour. A combat round in D&D is not just a one blow that hits or misses target but a series of attacks. Also fighter relies on his training to hit, which is represented by his THAC0.
Yet the AC system in AD&D does not simply represent the parrying of blows either with blade/shield or armor surfaces, it also represents complete dodging of blows. If one cannot connect with a blow, then the strength of the blow does not matter. An example where strength-based accuracy makes no sense is when a DEX-based dodge tank has to defend himself against a STR-based attacker. PoE does not suffer from this problem, because accuracy in PoE is provided first and foremost by the class as a base value and then incremented by 3 points every level with both of these values being representative of the character's training. Additional non-equipment sources of accuracy from talents and abilities also represent training and then finally accuracy is increased by the character's Perception attribute which makes perfect sense in the case of an agile defender.
Because D&D doesn't operate on that scale. A strike is not a single attack, but a series of blows and parries. The speed of your characters is abstracted as initiative, which is why depends on dexterity. Your attacks are faster in a sense that you attack before your enemy does.
It does, though. Games like BG specifically operate on a scale of single strikes which are even animated as single strikes. Speed cannot be abstracted simply as initiative, because faster attacks are carried out not only earlier, but also... faster, meaning you can execute more attacks in the same timeframe. PoE accounts for this by having dexterity affect the base attack speed of the weapon, which also depends on the weapon - something AD&D does not have. AD&D weapons only have speed factor which influences how early or late in the round an attack is carried out which is then modified by a random initiative roll that does not, in fact, depend on the character's dexterity.
Again, PoE wins massively in terms of intuitiveness and in terms of being less abstract.
That's because casting spells take longer and needs a wizard to be constantly focused. As for why you cannot stop melee weapons it's because the game assumes that attackers is constantly striking each other and avoiding blows during the melee round. So there's really no time in combat round to interrupt anything.
A fighter swinging his sword at an opponent needs to be focused as well. Moreover, it doesn't even matter if the fighter needs to be focused or not, a sufficient application of force should be able to stop the fighter in his tracks regardless of his focus. AD&D does not attempt to simulate such behavior and treats every fighter as an immovable object, PoE does. Again, PoE wins in terms of intuitiveness and having a lesser degree of abstraction.
AC system allows for variety of real-life situations to be represented in the game.
No, it doesn't. AC is a deeply flawed system for the reasons explained and is completely unintuitive in terms of real-life weapon behavior, because real penetration of armor is a non-binary affair: after-barrier performance matters.
Meanwhile the might case simply eradicates a powerful but physically weak wizard from existence.
That's because in order to cast spells in PoE, you need both strength of spirit and physical strength of body, represented by the cumulative Might attribute. A wizard weak in body, but strong in spirit is bad at casting, because his body is physically weak and that physical strength is needed to cast spells. This is how the magic system works in the setting.
Of course you can explain this in universe as having to be somewhat tough to be order to use strong magical attacks (kinda like in DBZ) but now the fantasy world is bending over to acomodate the rules, while it should be the opposite.
No, the "phantasy world" is not being "bent", because the setting itself provides the explanation! The thing that is being bent are player prejudices and expectations, as they are already accustomed to certain settings and do not wish to recognize the rules of the new setting, even though those rules are clearly stated.