Disagree. Damage cancelled is damage not dealt. Thus the price for the ability is never paid and thus the ability is not resolved.
The order is not: deal damage, cancel shadow, cancel damage
The order is: deal damage, cancel damage, do not cancel shadow
That is not how costs work in this game. Dealing the damage is a cost, if you paid the cost then you can cancel the shadow. The fact that a response is then triggered to cancel the damage does not mean that you did not pay the cost. We should wait for a response for Caleb, but I am positive that the Helm works with Erkenbrand.

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= KICK SOME ASS