So upon some analysis with my comrades today, we've discovered that we don't need to introduce a bunch of rules like "shields shall be splintered" and "class-based damage" and whatnot. In fact, much of the problem stems from the fact that the Caves of Chaos are fucking garbage.
The minotaur, who is significantly more dangerous than a normal minotaur (above average hp, wearing armor, has a magic spear), has way less treasure than he should. The orcs in Cavern B should have Type D treasure, and they are broke-ass motherfuckers. I have to go back and look, but I'm not sure there's enough treasure between Cavern B and Cavern C to make up a Type D treasure.
Oddly enough, compared to the usual Type J treasure, the kobolds in Cavern A were *bankin'.*
I do want to add the shields rule, and I'm strongly considering class-based damage so that people use weapons as a matter of style. However, I think for now I can just stick the correct amount of loot in the Caves o' Chaos.
I might also redesign some of the unexplored areas. While I thought it would be cute to have old-school dungeons dotted randomly across my campaign map, maybe I should be a little more...discerning.
I must also mention that, if one is using Keep on the Borderlands as written, it's much more lucrative to attack and rob the citizens of the Keep. Just sayin'.
I'll make some adjustments and we will see how next session (December 16th) turns out.
Now, to finally tackle our disappointment with the OSE druid... in another post.