I haven't followed Oblivion modding for several years now, however I thought I'd do a youtube search to see how things have progressed and came across this spectacular achievement http://www.youtube.com/watch?v=2eKzwKFlz8Y

Does anyone know if there is a thread following development anywhere?

It was originally posted in the OBGE thread, but little has been heard since then. I'd assume he's been busy.

Interesting. I know there's a version of the Morrowind Graphics Extender http://www.gamesas.com/index.php?/topic/1114956-shelter-from-magnus-blaze-2/, but I didn't know OBGE would be able to do something like this too!