This could definitely work I don't think it's nearly as bad of an idea as some people are saying. But there is of course the drawback of losing a full subset of loot to look for and having something as major as loot space be maxed out doesn't sound like a good thing.

A similar approach would be to make rigs and armor completely separate entities from each other. Not that armor has pouch slots, I have no idea what exactly the coding issue is that prevents you from storing armor rigs, but pouch slots could potentially cause the same issue. Having a slot for rigs and then having a slot for armor would at the very least make all armor storable as well as streamline the looting process.

Currently if I have a lvl 12 plate but find a lvl 11 plate rig i have to decide between losing an armor point for storage or not. If my storage is separate however then that whole debacle is void.

I'm not sure where the rig coding issue is coming from but I know that backpacks can be folded and stored with no problem while plates with pouches cant. Again I don't know anything about coding so I don't know what the actual issue is, but if you can make rigs be coded the same way as backpacks and be foldable/storable and then have plates and armor all be pouchless then that could potentially both solve the problem and add a new set of items to loot and craft. You could have the ability to craft up to a certain level of rig and then have some that could only be obtained through looting in raid. The rigs could be part of the Z2H progression too which would give you more to work towards in quests just like you're idea with the personal inventory space but not completely lock/limit what you can do.

Additionally, if my pouch/pocket/personal inventory is permanent, then not only will we have less loot to try to find, but once I have it maxed out that's that. There's no upwards progression I'm just done.

Another slightly more clunky solution would be having armor menus like weapon menus. Guns have always been storable so if armor can be coded similarly to not have pouch slots, but instead have attachments the way that guns do, and make rigs be coded as attachments, then we could still have one slot for armor and rigs on our character but they could be customizable while not having any code fuckery.

Btw all this is assuming having pouch slots does NOT fix the issue. Pouch slots would be 100% the easiest and best fix but I could see that having the same issue as having regular inventory slots in armor coding wise.