There is more to being a great warrior than slashing and smashing. I believe the perception of a great warrior would be someone who used strategy, cunning, and skill to overcome an opponent. So if stabbing the big toe was effective then yeah I guess they would do that, however, unlikely it is.
The only way to fight something really large (like say a brontosaurus) would be to lure it into a trap of some kind. Like a dig a trench and cover it up, hope to make the creature fall and break a limb. Then you can get on top of it and try get at its backbone, paralyzing it. From there you can get to its neck, near the head and cut open an artery. Otherwise... slash at its feet and kneecaps all you want, you'll just piss it off and it might take weeks to die. Then again you could just figure out what it eats and try to poison it too.
As for the creatures in Oblivion, I thought they were big enough. The rats being large made sense, kind of. It was the only way I could envision them being bold enough to attack people. Mountain lions are not actually that large. I've seen a few in person and they are nowhere near the size of African lions. The brown bears looked huge to me, especially when two of the chased me up onto a rock on my first game. Don't even get me started on minotaur lords or Goblin Warlords, those things are beasts. If you switch around to third person mode more often it is easier to appreciate the size of some of the enemies.
A week or so ago I lured a Goblin Warlord to that town used in the Molag Bol quest. He towered over me and the inhabitants, in fact I'm quite sure his head was peaking above the roof of one of the cabins.