I can play Oblivion flawlessly on ultra-high settings and max view distance. So I am confident this isn't a graphical issue. What seems to happen is after continuous play for approximately an hour, Oblivion will begin to slow down exponentially, freeze-framing to 1-5 FPS and remaining that way. I've attempted the console "pcb" command to no avail. It seems like some memory issue. Any solutions would be appreciated as I'd very much like to play Oblivion again.

After further testing, it seems to be a mapping problem. On rare occasion a NPC seems to have erroneous normal mapping; making them nearly glow and causing tremendous slowness. Perhaps it is a mod?

It's probably exactly a memory issue. You're lucky, in a way, that you're getting lags and slowdowns, rather than sudden crashes to the desktop.

This is an issue that we all deal with. The practical answer is to save often. There are ways of extending the playable time, but there's no way to eliminate these freezes and crashes completely.