The fact it has a a "small effect" isn't really relevant without comparing it to the effect of the other main form of damage reduction. I remember back in the day people testing it and finding that the more powerful enemies you faced, the more useful the avoidance part of the AC equation became, but I don't really remember many details. That said, due to limited itemization in the game it's usually not a relevant concern since the BIS stuff leaves very few options. If EQ had a diablo-like loot system it might be a different story.
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