However i think that is not the case. I feel that the same kind of feeling drawn from epic landscape shots in Lord of the Rings, for instance, could be achieved even with the -much smaller- physical limitations demanded by Skyrim. I don't think it's down to shear scale. I think it's about perspective and definition. I feel that Oblivion particularly lacks in both senses because;
A - Perspective is not utilized correctly as it is rare to see vast distances that are partially obstructed by foreground. By that, i mean that the whole landscape in itself is a little too smooth and generic. Differentiation between foreground and background is a fantastic tool for understanding scale, and it is much easier to get a sense of vast scale where it is common for foreground (and midground) to intersect background. This requires regions in the foreground (landmasses) to appear taller than those in the distance. Now i feel that this is very rare in Oblivion as firstly, the majority of the highground is towards the edge of the map, where you are restricted to one viewpoint (looking towards the middle), and lastly, because the terrain is so smooth and expansive (large hills and valleys), you tend to already be on an incline when you are looking, which distorts your perception of elevation.
B - Definition on the whole is generally lacking. By that i could be referring to, texture quality, LOD, depth of field etc. Definition is really the viewers ability to place themselves within the correct space of the image. How i think this can be improved is through improving the overall quality of mountain ranges, cliff faces, ridges etc. to provide individuality. You may stop here and think this is a daunting task, but what i'm asking really isnt. By individuality, i mean in terms of mountains around it. In Oblivion, the mountains toward the outside literally felt like one large clump of rock, that flowed around on the border. From a distance, sure you got that hard edge against the horizon. But up-close, all you saw was a clump of rock. No features stood out, it felt entirely inorganic.
Now how i propose this could be fixed is entirely within the terrains construction phase; Give Every Mountain A Story!
My idea is that during construction of these cold, rocky, desolate places, each mountain is looked at individually. The artist literally needs to look at the range and see that each rock, each chasm, each clifftop has a story. You can see how it has survived, how it has been scarred by storms, or once populated with camps. But i don't think the close-up details should cut it. From a distance, mountains and mountain ranges should have distinct identity. You need to look at them and see their forms, their definition, in terms of their immediate and distant surroundings. Definition is key.
Now that covers definition. Perspective is the easier of the two, and it has a whole range of tricks in it's arsenal. I have a feeling (or superhuman eye-sight that can decipher even the most atrocious of gameinformer scans) that we'll be seeing some depth of field, and a touch of motion blur to boot. All else we need to see is some raised quality in the distant textures, which from what i have read, shouldn't be too much to ask for.