I've already figured a lot of it out. Right now, I'm working exclusively on game mechanics. If you have any ideas then please feel free to contribute! I will include your name on a list of thanks!
In trying to keep the tradition of TES, I've developed a system that improves your skills from 1 to 100, similar to the games. It's pretty rough right now, but it works. I've been running practice sessions, and determining exactly how its going to work out.
There have been several attempts at this already, but I don't quite like how most people have handled it so far. The biggest obstacle I've encountered is tinkering with magicka, and attempting to balance it out with the more traditional Warrior archetypes. In its current state, magic is quite overpowered. I'm considering:
A) Keeping the magic as is in 3.5: A set number of spells per day, and spells known.
or
B ) Another more lore friendly system: A set amount of Magicka, rolled separately along with hit points. For example a Dunmer Mage would roll a d4 for hit points, and a d6 for magicka. An Altmer mage however, due to his/her innate magical abilities, would roll a d8 for magicka. I'm still messing with this possibility.
or
C) Treating magic like any other weapon skill, similar to 4th edition. If Valen Dreth the Nightblade wants to throw a fireball at the Bandit attacking a Caravan from Cheydinhal, he would roll a d2o and apply his bonuses according to his destruction skill.
If anyone would like to join in, then please let me know. I'm considering maybe starting a wikia, or something similar, so I can get all of this stuff on the web. I will update this post with any other news regarding the project.