Yes, shields should be able to shield you from directed attacks whether it is an arrow, a bolt of ice, or a stream of dragon's breath. Obviously it shouldn't be full 100% protection, but you should be have some benefit for putting something in between you and projectiles.
I see a problem with blocking dragon's breath though. Holding block now initiates a shield bash, but the dragon's breath attack is going to last a little longer than a bolt of fire.
Player - "I use shield bash!"
DM - "Shield bash what? the're no enemies around."
Player - "I'm attacking the darkness"
Dragonfire is magic because the dev's said the dragons dont breath fire. When they are shooting out fire, they are actually speaking in their language using a dragon shout.
technically its not magic then, its Thu'um, more of a innate ability than it is magic.