I have a GREAT SOLUTION to this, just display what armor they have on above the health bar
(these wouldnt be text of course, itd actually be the icon
[Leather Helm] [Diamond Gauntlets] [Titanium Boots]
[ Health Bar ]
Also, if you suggest custom skins, then suggest this, really. Not only will there have to be hundreds of models, custom skins would be buggy and 100% impossible to make visible armor with.