I see what you have ignored to have your interpretation, and that is that the Kylo damage card is dealt instead of something. That some thing has to be another damage card, or by your interpretation the target would keep the shield and "instead" receive the Kylo card.
well no I didn't ignore it at all
and it's not really my interpretation. that's exactly what the rules say
instead of losing a shield or being dealt a face-up damage card (i.e "suffering a critical damage"), you are dealt the condition's face-up damage card instead
hence
"When a ship suffers a damage or critical damage, it loses one shield token. If it does not have any shield tokens to lose, it is dealt one Damage card instead it is dealt the chosen face-up damage card."
