1) Your players are all wanting to min/max the system. Keep this in mind..
2) Since Nagazi already have tough skin, and since the Steelskin spell basically toughens skin, you could rule that the spell has no effect upon the Nagazi until the bonus is above +20...
3) The wearing of any sort of armor is going to have an adverse effect on the casting of spells (i.e. it will cost more PP and require more skill ranks). Armor DOES have a casting penalty.
4) Tough skin and Steelskin are not armor, thus when using the Martial Law tables, these both count as not wearing armor at all.
5) Nagazi are a civilized race, and are not likely to wear armor often. And even when they do, they will take the natural protectiveness of their skin into account and trust it. This means that in those rare times that they do wear armor, they are most likely going to wear only helm, bracers and either shirt or cuirass (my bet is on cuirass) (HARP Armor by the piece, page 89 of core rule book), not full suits.
6) They all want to be Warrior Mages? Okay, what sort of campaign are you running? Personally, for a group just being introduced to Cyradon, I would limit the playable races, for the majority of the group, to those from Anias. This allows you to have a group of people with a reason to explore their new world to find out what is out there. If they are all playing Nagazi, that means that some of them will already have the knowledge about the world around them. IMO, it would be quite alright to limit first time characters to those from Anias, at least until they have played through a number of adventures.
7) If you are using the "Grayson forms adventuring teams for exploration" premise, then while he will accept some of the Cyradon races into the teams, he won't actually form a full team from such.
Grayson and his people will not allow more than one or 2 non-Anias people on any of the Cyradon Teams.
9) Grayson and his people are, at the compact signing, given rulership over all of the Devastation. (The Restored Lands, specifically, but the Arali doubt that the humans can restore any more of it, so they gave them all of the Devastation in a gesture (which they will later regret mightily).
10) Being a very civilized and lawful people, the Nagazi would not go exploring without the permission of those who "own" the land, and this means that they would have to ask Grayson, if they wanted to mess aroun within the Devastation or Restored Lands, then that means getting permission from Grayson, and he will say no, unless they are willing to join human teams (thus busting up their "all-Nagazi" team.
11) Nagazi leaders will also respect what they give the humans. This means that they will require all Nagazi who wish to go exploring in the Devastation and Restored Lands, to report to Belynar, and join with Grayson's teams (this being part of the deal made in the Compact that all of the races signed). To do otherwise would make them criminals in the eyes of the Nagazi, and thus no Nagazi would there-after be criminals in Nagazi society.
That should give you a bit of ammunition...