In essence shielding works like this currently:
Damage comes into the mitigation formula
We calculate our total mitigation from spells items and AAs and save it for later.
We plug our damage and mobs into the AC formula and reduce the damage.
We then do straight up mitigation from the remaining damage.
We check to see if we're below minimum hit, if we are we set to minimum hit.
Tada
How it will work.
Damage comes into the mitigation formula
We plug our damage and mobs into the AC formula and reduce the damage.
Damage mitigation from AA's is applied to the AC roll, thus adding the mitigation from damage reduced by the AC formula.
We check to see if we're below minimum hit, if we are we set to minimum hit.
We mitigate the remaining hit by item mitigation based off the minimum hit (so if you were capped at 35% item shielding and had a mob with 880 min hit it would reduce the damage by 30

We do straight up spell mitigation to the remaining damage.
Tada
I changed it to be a bit more complex but after reading lots of stuff and talking with quite a few people I believe more accurate.