I mean yeah obviously some logic ought to go into it, getting fried by dragon fire is probably going to make your robes more than a bit dirty, but just like you say with the cleave rule it should only be when the damage is enough to go [i]over[/i] should the damage than be transferred to say, your equipment. Optionally of course. If I had 65 HP and got hit by a fireball that did 50, I'm in really rough shape but all of my gear ought to still be perfectly usable even if I'm wearing silk robes with a net. But if I take another fireball for another 50 damage when I only have 15 HP left, then yeah it'll only make sense that not only am I fried, my gear is also in the process of burning too. But at that point I have a few other problems than some ruined equipment.