The health regeneration was put in last minute. Originally the only way to heal was to parry (block the shot right before it hits).However, We added the health regeneration just to make the game a tad bit easier.
Regarding your question about the story, in a way yes ,the character is supposed to be grabing the bullet. The idea is that the robots are shooting an energy based shot, and the player is using his shield to absorb the energy. He has a body shield that absorbs some of the energy and a deployable shield that absorbs more energy and can block damage.
Thanks for playing