I think a lot of the items in TP were kinda unnecessary, not just the Magic Armor, but that's what happens when a game tries to cram so much in. I used the Magic Armor once, against the Darknuts on the last floor of the Cave of Ordeals, even then I don't think I really needed it but I wanted an excuse to try it. There really was no place else in the game that it would have been helpful to me. Even the final boss fight was rather easy.
I saw the Armor as more a collection item than anything else. Awesome it was, I loved the way it looked, but for experienced players it was really rather useless. I bought it simply because I wanted 100% in TP, and because it looked awesome.
On a side note, I hated that it ate up rupees since I'm one of those people that can't stand not having a full wallet, but then again, I wouldn't have been much happier to see it drain magic if we had that either so...either way I didn't like to wear it. It was just there for the sake of being there for me.