How effective are defenses above 100? Would it be worth sacrificing AC in order to get higher defense skills? Is there any easy way to gauge it's effectiveness? I was also wondering how big of a difference does it make having the defense above 101. Is 102,103,104, etc. much better, or is just getting it to 101 a good enough bonus?
Defenses above 100?
Generally they are pretty great. Anyone who had fought Suunmar with a staff and about 106 or so in two handed knows how hard it is to land a blow. Anyone who fought a shield expert warrior would know the same as well.
Always worth the extra +parry/dodge or whatever. Depends on how much -ac you're talking about. If you're talking about -20 or so ac, that could come in handy, but it all depends on the person as well. If the +defense also gives extra things then the +defense might be better than you think. I can think of one item that gives +defense and is great for another added bonus that I'd prefer over some other items even at 50. Granted it's only there when I can't get to it and when I can it's always gone. So in short, yes it's worth it to have over 100% because it means you have that much more of an advantage over everyone else in that particular skill/spell.
Weapons > %parry.