I had my first contact with the game today after being introduced to TES through Skyrim last year, and I have to say... the characters appearance isn't as bad as I thought.
Sure, most npcs look bad, but I was surprised that it really isn't difficult to create actually good looking characters in the vanilla game. After a little tinkering here and there, you can get satisfying results.
The main problem is that the initial models have very wide faces and big noses, both of which can be taken care of.
On a side note, the lack of snow is such a fresh breath of air for me. Sure, there is Bruma but I love how it illustrates the transition between a province and its bordering neighbor.