Stop thinking of it as damage resistance then. THink of it as a bonus modifier to your time to live. Then there is no diminshing returns. If you've got +50 in Time to Live Mods, you live 50 % longer to the same damage as without.
YOur consoles lose no effectiveness. They always add the same benefit to your ships life expectency.
The logic behind it not being straight resists is - if you could get 100 %; you would be immune to damage. You can't be killed. Resistance mechanics that work like that won't scale well.
Shield resistances do not "follow that logic". But - you are not invulnerable with 100 % shield resistance. Your shields are invulnerable, but your hull is still suspectible to the bleedthrough damage. That is probably why they did implement a different formula for that (and also because the only way to get shield resistances was to use powers with limited durations.)
I grasp the concept, just wonder why the diminishing returns started on the first console and not the second slotted, with a third or fourth consolde having even less to offer. More a curiuosity than anything else.