Does it actually destroy the opponent's shield literally, completely removing it and forcing them to go and buy a new one, or just disable/weaken it for a certain amount of time? If it totally destroys it, I assume it has a rather low chance of working?

That skill works of the durability of your shield. Everytime it is smashed the durability goes down. Here is an example using WEAPONPROBE.

Physical cutting:________55
Physical blunt:__________38
Armour Status:___________170 <- If this goes to 0 say goodbye.

You repair status with a forger.