Wow! First time posting my a build of my game for playtesting and I am impressed at how great the feedback is. Thanks guys.

The only big thing I dislike is how the medium-range camera lags behind the player's "character".
I am with you on this one. I am going to try and experiment with the idea of the camera being in front of the direction where the player is moving towards and the direction the character is pointing the shield. I think this will be beneficial because it will give you a better view of where you are heading at (or blocking from).
Even though this is mainly focused on the camera, I want to say that I really like how this game feels. The natural/organic movements of the "character" are great, and the feeling of force when your shield is hit by those pellets is pretty amazing. I really got a sense that I was defending against powerful hits. Making the pellets fire faster the closer you get was a really good idea that served to increase that sensation.
Thanks for sharing that. That is great to hear because one of my main goals is to make the game feel natural and organic.
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The implementation seems just fine to me, but I do worry that with such a dynamic camera, it makes it tougher to aim your shield properly using the mouse. Considering the shield is directed by wherever the mouse is in relation to the character, the camera moving around on you could drastically alter where you are aiming. This would be no problem for a twin-stick system, but you'll have to be very careful with your camera direction if this is the control scheme you want.
Yeah, I noticed it being difficult to use the shield towards the end of the prototype, but I wasn't sure why. But after your feedback, I realized that it was because the camera was moving as I was using the shield. I will be using the mix between this dynamic camera system and the twin-stick system, and I'll just have to be careful on how I set up the camera movement.
In addition, it's vital that you keep your eye on exactly what part of your body the shield is covering, but the only way to get this data is to look at the shield itself. This can make it tricky to keep an eye out for oncoming projectiles when your eyes are going to be fixated on the character itself. It's not a huge problem with the tech demo you've put forward so far, but it could become a much bigger problem with more difficult projectile setups.
Good point. I will try and experiment with moving the camera just a little towards the direction you are pointing at. I am hoping that this will make it easier to block something without keeping your eye on the direction of the shield.