I don't want to get into the MW vs OB argument. My point of view is that they both had good points and bad points and meh points and my personal preference is to play Morrowind, especially as I have older gaming equipment that just has trouble handling Oblivion sometimes. I liked Oblivion, but I had some trouble with it. The rest of my post is going to be comparing the two of course, but only because my experience with other TES games is limited, so I'm trying to pick out what MW did right and what OB did right and combine it so the devs can see it and hopefully use it for Skyrim.
I think the magic system was incredibly frustrating in Oblivion, though. I really like the "if your attention is split you do less impact" idea, I think that's a wonderful way to encourage mages to be mages and not use weapons, but at the same time it doesn't forbid it. I absolutely hated the 100% success rate thing. Morrowind was irritating as poison ivy when it came to casting spells and failing, especially with the non-rechargeable magicka. I liked Oblivion's recharge system. I think in Skyrim, what would be great is a magic system that is more forgiving than Morrowind's, but you can still fail spells. I think they should NEVER EVER use the "you can't cast this because you are not this level" idea, because you should be able to do whatever you want. You should be able to do whatever you want, and the game should be able to punish you for doing something stupid. So, I think you should be able to try very difficult spells, but you're likely to fail if they are too difficult, and maybe if they are super difficult you have a chance of failing badly, like accidentally burning yourself with a fancy fireball spell, or something.
I was okay with the combat system in Oblivion. I liked it better than Morrowind's system, which was mostly clicking really fast. I never got into combat much in Oblivion, so I can't speak for the swords and stuff. However, I REALLY liked the bow mechanics. It's one of the things that makes me sad when I go back to Morrowind, since Morrowind, despite having a wonderful variety of marksman weapons, was unrealistic and frustrating. So, my input for combat: Bows are great. But arrows can't go through everything, so can you put in throwing weapons and crossbows and maybe blowdarts? Crossbows can punch through plate armor, if I recall correctly. That would be super nifty.
Stealth was better, for me, in Oblivion than in Morrowind. I liked the better sneaking implementation, but I agree with the troubles you mentioned. I would be satisfied with the same system, except:
- Toggleable eye, like "do you want the eye on your HUD or not"?
- NO PSYCHIC GUARDS
- Be able to re-hide
- Searching behavior
Alchemy you didn't mention. I liked bits from MW and bits from OB. So do this:
- You should be able to try to combine any two ingredients. MW let you combine any two ingredients with effects in common, but OB made you only able to combine ingredients if you had already discovered their effects. You couldn't experiment. I think you should be able to combine ingredients and get worthless potions that do nothing OR at least be able to try to combine two ingredients and the game says "no effects in common, can't make potion." I remember discovering that one of saltrice's effects was restore health ages ago before I could properly see the effect. It was really cool.
- Keep the sorter. OB had a "highlight the ingredients that I KNOW have effects in common with this one" option. That was fantastic.
- Potions should PLEASE BE PHYSICALLY SMALLER. No one swigs a gallon of potion. Make 'em a few tablespoons at best.
- You should be able to apply any potion to a weapon and eat any poison. Yes, this is probably worthless in game, but c'mon, everyone's made a deadly poison that accidentally restores fatigue which the game thought was a beneficial potion and wouldn't let you dip your arrows in it.
- If you apply a poison to a blade/arrow/thingy it should last for a few strikes. Maybe it should last as 100% intensity first strike, then 50% then 25% then none or something. Also, you can dip more than one arrow in to a poison, I'd think. At lease 5 arrows per poison bottle, c'mon.
As for levelling, I think a sort of combo would work. I'd like there to be regions of easy, medium, hard, where the creatures would level with you for only 3 or 4 levels and then stop gaining. That way you can get interesting fighting out of a place for a little while, and then you get better and it stops being interesting. I also think that low-level creatures should stop attacking you. Come on, now, lone wolves wouldn't attack. Deer run away. Bunnies run away. Bears would nom you, but yeah.
Wow, lots of text. I sure hope the devs have thought all of this through. And I hope they actually get the time to implement their stuff properly.
*EDIT: I want to mention, actually, devs, if you're reading this: If you ever have the choice between outright forbidding something or making that something very difficult and likely to go horribly wrong, please take the latter. I mean, real life doesn't have safety fences. If you want to cast that 200pt fireball spell as a total noob, okay... but... you might light your hair on fire and not touch anyone else. The way to make things undoable is to give penalties for being stupid. Like, mages can totally wear heavy armor, but, you get your agility and magicka docked for it while it's on. Make people do stuff you want them to do by making the other options inconvenient/dangerous.