I recently got oblivion again after about a year and a half without it (I sold my xbox long ago, but bought a new one in preparation for skyrim) and I've come to discover that one of my favorite sites (Grimblades) is quite dead. The reason that I loved the website so much is that they had contracts, which were basically user generated quests using certain in-game things as rewards. Of course now that it's dead there are no more new contracts I figured that this would probably be the place to go in search of a new website to get contracts from.

Well, there was a thread in the Fan Fiction area where a member RPing as an agent of the Dark Brotherhood was taking requests for hit jobs. You'd give him the name of the NPC and the manner in which you wanted them killed, and he'd give you screenshots of the deed being executed. Is that the sort of thing you were thinking of?

How would the rewards work? With the Dark Brotherhood thread it was just people saying, "I'll pay you 'x' amount." Were the rewards released as little mini mods upon completion of a quest or something?

Yes, that's pretty much exactly what I was talking about. As far as rewards go, they were often pretty lame such as "you can keep anything you find in x's house after he/she is dead" or "feel free to use my cave as a home once the contract is done, it's located around here", etc. In game stuff, that way even people on consoles could enjoy the rewards.