You don't have to take damage for this to trigger, you just need to be hit by a succesful attack. And as you already stated oblivion shield prevents DAMAGE not the ATTACK and therefore based on its description the way that it works is correct.
Nah you weren't it's a lot more to it than just that. The person who got it nerfed beat Tiny and everyone started using it after.
Baby Dreadnought just sounds like awesomeness. Please can we have a Baby Dreadnought rune in a future expansion. @Sokolov