i've played oblivion on various brightness settings, adn on the default the aylied ruins and caves seem so dark. what is a good brightness setting for oblivion?

Play with it and find what works best for you. Personally, I think caves and ruins aren't dark enough, so I use a mod to make them darker.

I do that as well, and use mods that increase darkness overall (among other things). And some that make lighting more realistic, just for good measure.

I've tried fiddling with the brightness setting of Oblivion itself, and I'd rather just leave it as is, now I've found much better alternatives.

If you do not want to miss anything just crank it up, especially if you dislike the gloom.
Otherwise use torches, and spells to increase the light, this is what I do to give the feeling of being in the game.

I like the spooky darkness of the dungeons. I usually bump the brightness down a little from default. My char avoids surprises with lots of detect life which also lets her see when it is safe. When she wants examine something, she briefly uses a torch or light ring, then returns to darkness and moves on. She has to be very careful about traps, but knowing this weakness in her style, and moving slowly and carefully, helps a lot. The only time she uses night eye is to briefly examine something when there are foes around.

There is no 'best' solution except the one that works best for you. Try different approaches.

I think the brightness can also vary from monitor to monitor.

I've no idea what your system is (I assume since you're said you were using mods, it's a PC) so all I can say is this:

Set the brightness settings in Oblivon on exactly 50%.

Exit the game.

Open your video card console - for me, it's the NVIDIA Settings on the bottom of my Windows toolbar. Find something that says color or gamma correction. Most have some kind of test; work through that until your satisfied with the result.

Then go back to the game and see what you think.

Franky, it's an impossible question to answer because video cards and monitors are so different. My desktop - which I rarely use anymore - has an ATI Raedon card and a ViewSonic monitor. With the gamma/color adjusted, Oblivion plays dark and forbooding, even with the in-game adjustment at 50%.

On my MacBook, the Oblivion world glows with color - especially after I installed Weather: All Natural. Of course, I've adjusted my MacBook (even the Windows settings) with more care for digital photography and art purposes. Mods and W:AN make the game darker, the nights deep and rich in color, and so on. Now, when I go back to my desktop, everything looks red and yellow and washed-out.

~ Dani ~

As Goth Girl said, you might want to look to your monitor. On my old crt Oblivion was dark and dim. Even with the brightness turned all the way up on the monitor, I could not see inside the shops, let along the dungeons. When I bought a new lcd monitor I was just stunned. Even at the factory defaults it was far brighter, and filled with color that I never saw on my old monitor. Now I can see fine not only in the shops, but in all the dungeons, without needed night-eye, torches, or magical light.

i set my ps3 version so torch light is realistic in caves - i mean judging by how far it penetrates the gloom. i'd say anything much over 30 feet away should be almost too dark to see...

I've had a similar experience as SubRosa. With my new LCD screen, I thought everything might be too bright 'cause I could go through dungeons without having to use a light or night-eye spell. So I turned my LCD's Black Level to low and Oblivion's in game Gamma setting to 25% and found that to my liking.