In your rules there are very useful not all that expensive talents with DX requirements, like Weapon 2 talents, Fencing 2 and Shield 3. So characters tend to buy the DX because they need it for the talents, and this channels characters along particular paths. A fighter has a strong motive for getting to DX 16, but not much to go further. (And once they have the IQ and DX requirements they buy all the talents fast as they can.)
Because characters acquire high DX for reasons unrelated to attack rolls, they tend to laugh at Defend actions. So the weakness of Defend is in fact driven by the superficially unrelated DX prerequisite system for talents.
I can't recall ever seeing a magic item of any kind in The Slope, or anyone deriving a benefit from DX>16 in a melee attack.
If you think DX>18 is useful then I'd be interested to see a character design on a reasonable number of attribute points with DX>18. I think you'll find it very hard to build one that is efficient, unless perhaps you have a godlike number of attributes and go for your IQ 17+ bonus attack talents.
I suspect the ineffectiveness of Defend is mostly intentional. The designers didn't want characters adopting a static defense strategy, but they recognised it made sense and in play testing occasionally a player said they just wanted to just defend themselves. So they made it not very good.
The problem with Defend and Aim is that it is only superior to defend if you value causing your opponent damage, and that's exactly the circumstance in which you want to Attack rather than Defend.
The problem with Defend and Edge Away is that it is only useful if you value withdrawing from combat, and that is exactly the circumstance in which you want to Withdraw immediately rather than Defend.
These two actions each have multiple benefits. But the benefits don't play well together - one is good in circumstances where the other is bad. So they generally don't fit well with any particular strategy.
The issue with automatic miss is that against the most capable opponents maybe you don't want them to have one chance in three of missing.
Have you considered giving Defend one or more hits stopped in addition to the extra die?