I don't believe there's a way to change the 75% damage reduction cap, we just have to work with it. So, I don't think Vitality should add bonuses to damage reduction. How about either just +hp or +hp AND +hp regen? I also think the +hp bonus should be a little better for Vitality than it is now.
Armor and shields should be the providers of damage reduction. This would also allow us to balance things in a more satisfying manner in other ways as well:
1) Soft cap the maximum damage reduction from armor. No combination of armor should allow one to hit the 75% cap. That would devalue skills that add damage reduction (like the Engineer's Bulwark skill).
2) We can make light, medium and heavy armor significantly different. Heavy armor could have a high strength requirement, meaning it's most useful for melee characters. So, melee characters inherently get better damage reduction. This means we can remove the 25% innate damage reduction on melee characters like the 'zerker and engi. If they want to be tough, they have to spec for it. Light armor can give less protection and require much less Strength, or it could require no stat whatsoever. Medium armor could require a moderate amount of strength, giving rogues and archers a choice between maxing their dex and being total glass cannons or getting a little strength for some added protection.
##Dexterity##
We should keep the secondary bonus of stats meaningful for any character, like Str's bonus to crit damage.
For dex we have one good option:
+Attack/+cast speed. +attack/cast speed bonuses should be somewhat lower than Str's +crit damage, since (for most characters) they're going to add to DPS faster in an environment where you can't get +crit from stats. I feel like all of the other stat possibilities for dex are capped (dodge, crit, fumble, execute), and like you said, should be relegated to item bonuses.
I like Anarch's idea about reducing cooldowns, but that's just too much of a beast to take on. There's no elegant, quick way to do it in GUTS. It'd have to be worked into each and every skill individually.
##Magic##
Are you suggesting we drop bonuses to flat magic damage from this stat? I would rather drop magic weapon damage bonuses. Why? Magic weapon damage bonuses don't affect flat damage spells. Flat magic damage bonuses will affect both flat damage spells and wand/staff damage because wand and staff damage is all elemental. I'm not sure if that would be overpowered compared to Str and Dex.
I'd love to hear from some more people here.