After 80+ hours, I offer my candid review, having played Oblivion extensively and identified strengths/shortcomings.

User Rating: 8.1 | The Elder Scrolls IV: Oblivion PC
I'm going to relate things in Oblivion in this thread only to Morrowind. I want to discuss what I think has been improved upon or taken some steps back. Let me preface this by saying I am very excited about Oblivion's potential for becoming an all-time great with some good work from modders and the devs. So anything negative I say isn't a flame or an attack on Bethesda, but a well thought out criticism.

I'm going to try to divide things up into different categories and analyze each one, giving a final grade to each category after brief discussion. Now off to my review.

INTERFACE [not HUD]
I think many PC gamers are with me on this one in thinking the interface has been totally console-ized. That is not a good thing. I have heaped praise upon Morrowinds UI because of the flexibility afforded to the end-user. You could move windows around, resize them, and get things just where you wanted em. I liked having my spell list in one place, my character sheet, minimap, and inventory in others. It was sweet! Oblivion's UI seems very clunky in comparison, and if not for the immediate PC mod released shrinking the font and such it would be a complete nightmare. However, I do like the listing of items, even though I wish the mini-icons were more Morrowind-esque in terms of showing what the item looks like. Also, you cannot delete spells and the spellbook gets super-uber cluttered midway through the game. What the poop?!?! The bottom line here is that the devs made the interface with the Xbox360 user in mind, and were too lazy to make a better more customizable one for the PC. I know the console market is a bigger one, but Bethesda is still around today because of loyal PC gamers and they should’ve spent some time making a good PC interface.
RATING: D [major step backward - however, this is just annoying, not really a terrible thing]

COMBAT [how it feels fighting]
Okay, some people have gotten all pissed off talking about combat because they feel it is more action-esque and less RPG-ish. I am not in that camp. I love the way combat "feels" in terms of the visceral feeling of whacking enemies with sharp sticks. The block button is a great addition. The way spells can toss badguys around is frickin sweet. The inclusion of different kinds of attacks that really mean something is great. Being able to case without unequipping weapons is a great inclusion. I wish there were headshots with bows and spells, but hey, you can't have it all. I also really like the enemy healthbar around the crosshair, it's very unobtrusive and gives you that feeling of how you're doing against a foe. Really, in terms of combat feel, I've got nothing but love for Oblivion. Hats off to the devs for a HUGE improvement from Morrowind in the combat system.
RATING: A+ [you guys did your homework on this one, fantabulous!]

RADIANT AI [live up to the hype?]
This was a much talked about feature in this game. Some people have been very critical of it, but I am looking at it in comparison to Morrowind and in respect to how much there is to Oblivion. Given those paramaters, I was and am still wow-ed by the radiant AI. No, the NPCs in Oblivion don't really seem like they are other real human beings, but they are a hell of lot more realistic and interesting than Morrowind. The random fights I have seen are awesome, the conversation aren't the best things ever, but breathe some more life to the characters. The scheduling alone is a huge improvement from Morrowind. People need to remember this is an enormous and amazingly ambitious game. In that light, and because of the "radiant AI moments" I have witnessed as a player, I am very pleased with it. However, the NPC dialogue tree still seems very contrived and actually has less options than Morrowind, but that has a lot to do with the scope of the game and I imagine the desire to have full speech for all lines. The RAI is definitely a step forward in the series, but there is still a lot of room to go up.
RATING: A [this was a very difficult task, that came out very well all things considered]

EQUIPMENT
I'm not going to be nice in this section, so prepare yourself. Ready? OKay... I played Morrowind to death, probably 5 times through, hundreds, maybe even a couple thousand hours. I loved accumulating stuff. I had robes, shoes, belts, gloves, armor, weapons, etc. etc. etc. all stockpiled in my various houses and bases. I am very very displeased with the "dumbing down" of equipment in Oblivion. I liked wearing different gauntlets, pauldrons, or gloves on different hands/arms or even just one gauntlet or glove... I liked wearing belts, I liked wearing robes over my clothes and armor. There is simply much less variety in Oblivion's equipment. I am extraordinarily disappointed with this, and it hampers the ability to customize your character to your liking. Furthermore, as a result of the level-scaling, rare and awesome equipment is neither rare nor awesome eventually. PC users will eventually see more equipment via mods, but I am still at a loss for the reduction in armor/clothing types. Bad bad bad. Dumb dumb dumb. Why why why?!?!
RATING: F [substantially less variety, and nerfed availability b/c of level scaling - like 8 miles backwards – these changes stink of Bethesda pandering to the console crowd]

MAGIC
Like I touched on in my combat review, I really like how magic works in the entire combat picture. It feels better casting. Allowing casting while having weapons equipped is a huge plus that makes playing a mage character a lot more fun. I kind of miss being able to fly, but I'll live - flying also unbalances things quickly. The magicka regeneration is huge, because it makes spell casting much more reasonable. The spell effects are awesome looking and sounding. Doing away with the enchanting school was a good move. The spell system is very versatile and rewarding. Not a lot has been changed substantially, but the subtle improvements make magic weilding much more potent and enjoyable. Casting spells to soften up then attack the badguys is fun and rewarding. Some changes to enchanting also make casting offensive spells using your magicka pool much more necessary and more strategic.
RATING: A [well done, see my enchanting section to see how it relates]

ENCHANTING
I have mixed feelings here, but overall feel good about it. I'll start with the negatives to get them out of the way, then move on to the positives. My biggest complaint is that item quality doesn't seem to be nearly as important [if at all] when enchanting was it was in Morrowind. The quality of amulet, ring, armor, or weapon seems largely if completely irrelevant when making a new magic item. Quality of soul seems to be the biggie. That being said, some other major changes are really good for game balance and roleplaying experience. First of all, eliminating enchanting as a skill was a good move since it was a huge pain in the a$$ to try and improve. Secondly, eliminating cast-when-used items was a good move I believe, because you can no longer stock up powerful rings to cast all your spells. This forces spellcasters to use their own magicka reserves. I do wish you could enchant your own staves though [maybe you can, but I haven't seen that done yet]. Basically, enchanting is no longer a quick ticket to becoming a demi-god, but still is very important to customizing your character. Now, part of me thinks some of the equipment "dumbing down" was so that people couldn't have too much enchanted gear.... however, I think we could still have all kinds of fun equipment and retain enchantment balance by either a) making some item types unenchantable or restricting the enchantments on them substantially. However, overall the enchantment changes make the gameplay better.
RATING: B [gameplay is better because of it, casting your own spells now necessary, but item quality should play a bigger role in enchanting]

GUILDS/FACTIONS
I have mixed feelings here. There are less guild/factions to get involved with from the get go. However, many of the quests/plot developments are much better thought out and more interesting than in Morrowind. The devs clearly took a quality before quantity approach here and I think it works. Particularly since I have to imagine they will add more guild/factions in future updates, and so will modders. I don't want to give away any spoilers here, but the plots are solid, particularly the Dark Brotherhood. However, guild NPCs still aren't very compelling for the most part as characters, I'm not attached to them. Also, most quests are strictly linear with no real choices to be made by the PC. Level-scaling rears its ugly head in the factions, the ability to become arena champion before lvl 5 is by far the best example. I mean come on? That is just bad. However... I will leave that criticism out here and not factor it into my rating for guild/factions.
RATING: B [much improved in terms of quality from Morrowind, but less guild/factions, NPCs still very cardboard-ish]

MAIN QUEST
Eh... nothign to write home about here, I liked Morrowind's better. NPCs are rather un-compelling as with the guilds/factions and the main plot is essentially entirely linear. I would like to have seen more opportunities to pick sides, make tough moral decisions, etc. in the main story line. That being the case, the main story line is not nearly as important to TES games as it is to most, so it's not a huge let down. TES games are more about the complete experience than just advancing the plot. I would have liked to see more emotional attachment and character development in some NPCs though as well as not being so predictable and straightforward.
RATING: C [much of the same, not really a bad or good thing]

MAP & COMPASS
I’ll keep this short and sweet. I think the markers on the big map just pointing you to major locations in quests isn’t a bad idea, it keeps from you from getting lost. However, markers should tell you where everything you have to do is, in real time, with markers on the compass. This is holding the hand of the player way too much, and really takes some of the fun out of the game. Where’s the fun in exploring a dungeon for a quest if the damn markers are telling you exactly where to go. At the very least, you should have the option to toggle the markers on-off from within the game.
RATING: C [good idea – to help players from wandering aimlessly… bad implementation b/c it holds your hand way too much, PC mods help with this]

LEVEL-SCALING[long section]
This stands out as one of the biggest blunders in a game’s design in recent memory. The level-scaling system is implemented on an almost universal level, so that the bad guys and loot you encounter in the game is right in line with your character’s level. This means that when you are low levels, you will encounter weak baddies with poor equipment… when you are a higher level, you will encounter strong baddies with powerful equipment. That’s the short short version, on to a long discussion, I will start with the problems created by scaling:
[1] You can pretty much go anywhere in the world from the get go. In Morrowind, before levelling up enough, if you even went to certain areas of the world, you'd get OWNED by the locals. This has and is the case in most RPGs... this encourages you to gain the proper skills/equipment/levels to go somewhere and makes the world seem to get bigger and better as you advance in skills. In Oblivion since pretty much ALL of the monsters/baddies right along with you, you can pretty much go around the whole world on low levels and not have to worry about what you're going to run into. In fact, in some cases it's easier to do things at a low level because the low-levelled monsters are easier to defeat with simple low-level tactics. There should be lots of places where you simply cannot go at low levels for fear of being pwnzerized. A freeform open game shouldn't mean you can go anywhere and do anything at anytime.
[2] The acquisition of magic and powerful items should be rewarding. It isn't. I have played up to level 37 [maybe 38 now] and can tell you first hand about the "bandit loot" issue. First of all, to the people who are trying to argue it isn't real... IT IS. Either walk from town to town, or just quick-map to the various "X CAMP" sites on the worldmap and you can run into various bandits. They are levelled and once you reach a certain point have ludicrous equipment. I don't feel cool or like I accomplished anything having a daedric longsword and glass armor if random chumps have it, and I could collect another set within an hour of fighting random encounters. To see just how ridiculous it was, I set a 60 minute timer and proceeded to "bandit farm" and sold all my spoils at the 1200 max thieves guild fence, and totalled more than 57000k. Not to mention I was hawking off daedric, glass, ebony stuff, etc. which is theoretically rare.
[3] As you become more powerful, sometimes you should feel more powerful. Not powerful beacuse you just bested a sinister overwhelming vampire lord, but powerful because some smallfry f-ed with you and you turned him into a grease spot. In Oblivion, because just about everything levels right along with you, you never feel like you've become more powerful than the run of the mill NPC human... serious problem here. You are supposed to be role playing a [censored], if everyone in Cyrrodil is so damn strong, let them go through the Oblivion gates smile.gif That isn't to say that as you reach high levels everything should be easy, but some things should become easier.
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Now, having briefly described the problems, let me present some instances where these problems don't exist and let you guys reminisce with me about what was good about it.
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As for [1], in many RPGs you feel awesome when you finally are decked out and powerful enough to go and venture into the EVIL TERRIBLE ABYSS OF DOOM or whatever the [censored] location is in the game. Think about in Morrowind when you were finally able to venture into the wasteland areas and fight off all those [censored] undead. This isn't the biggest problem in the game, but I still think it is a problem... there should be more areas that are simply unreachable until you're tough enough.
I believe [2] is the biggest snafu in Oblivion. Now, most of us here discussing this have played a lot of CRPGs, and definately played entirely too much Morrowind. Think back to Morrowind to the house or mansion or guild base or whatever where you hoarded your awesome loot. I was into that before the mods... now think post mod. Remember when you downloaded the dummies so that you could put your armor on display in your [censored] mofo house - that rare armor that you spent hours and hours and hours getting a complete set of glass/daedric armor… maybe enchanting for specific use, etc. Think of the display cases of daedric weapons you had. Maybe all of you didn't do that, but loot in Morrowind came to a new level because it was hard to get and fun to display. Hell, in my most recent game of Morrowind, I played with Vampire's embrace, and had an entire mansion full of my thrall slaves outfitted with [censored] armor and weapons that I had accumated in hundreds of hours of gameplay. Over the top, yeah... but awesome, fun, and unique to Elder Scrolls. I for one cannot pretend those bastard bandits don't have [censored] equipment like I do and by God they shouldn't!
As far as [3], I think it is hard to do it right. Morrowind needed the help of modding to make the game feel more "right" here, because prior to some help, it was too easy to become overwhelmingly powerful and not have any challenging fights. Oblivion has gone the other way, tried to keep EVERY fight even by using the levelled baddies, but consequently missed out on the FEELING LIKE A powerful hero. As for what I'm talking about - I'm sure many of you played Baldur's Gate II and the Throne of Bhaal expansion. While obviously fundamentally different from Oblivion in many many ways, it did provide something special in combat. You had some fights that were against very powerful opponents that took 15+ minutes, required careful management of all your resources, and left you with a supreme sense of having beaten a quality opponent. You also had instances where a single or few weak sauce badguys would mess with you.. and you would smite them like nobody's business. Finally, you had instances where hoards upon hoards of weak-mid range guys attacked you, and your souped up a$$kicker demolished them in waves which gave you the feeling of becoming really really powerful. Right now, Oblivion only really has the first variety... where you combat against tough guys and come out on top, it needs more.
RATING: D- [the ONLY saving grace is that Oblivion doesn't become really really easy late game like Morrowind – but the level-scaling as is breaks the game, you can beat the game at low levels – exploration and gaining equipment doesn’t really seem fun]

OVERALL
The level-scaling problems really frustrate me because they permeate the entire experience. I also think the UI and equipment were nerfed. Combat and magic are definately better, technically the game is brilliant and amazingly glitch free [in my experience] considering the size and scope of the game. Now, I am going to be very unorthodox in my final grade, because I am going to provide one for right now, today at this moment - then a second, projecting what I think will be the grade of the game a year or two from now, with patches and mods and such all applied.

FINAL GRADE TODAY: C [level-scaling breaks things]
FINAL GRADE LIFETIME [a few years down the road with mods/patches]: A+ [one of the greatest, most immersive and impressive games ever created, Bethesda programmers inducted into life Hall of Fame]