First of all, your math is a little off; 60 + 55 is 115, not 125. And that's not as high as you think compared to what a Warrior has versus physical attacks. Most warrior armors have 100 AL against physical attacks (
stats here). Add a shield to that and the warrior's got 116 armor, which is already slightly higher than yours. Now add an absorption rune, damage reduction modifiers on the shield, possible additional equipment bonuses such as that on
Legionnaire's armor, damage-reducing shouts and stances, etc. and it's no surprise that a warrior is still more durable than you versus physical attacks.
After taking all this into account, if the discrepancy is still greater than you'd expect, then make sure when you're using it that you're not facing an enemy who's stripping your enchantments.
I've used Armor of Earth many times, and it does work as advertised.