First off, I'll give my opinion on fast travel: It's -necessary-!
Now, with that in mind, I don't think the player ought to be able to just click on the map and instantly go anywhere he or she so pleases. Why? Because that's lame! It's insanely imbalanced the way it is, to think that you can just pop into the map and get from one place to another without having so much as a single obstacle get in your way. What's the point, then, of having the gameworld? What does any of it matter if I can just jump from one point the the next, selectively choosing all my encounters?
That's not a mechanic I'd like to see again. Not in Fallout. Not in the Elderscrolls. Not in -any- self-respecting game.
It's one thing to get from one place to another quickly. It's another to make it the ONLY method of going one should ever use if sane.
Go back to the fast travel being a -service-... but don't do it like Morrowind. Let the player be able to hire someone to take them to a specific place they want to go on the map. Make it work just like Oblivion's fast travel in that regard, only it costs money. And then, if the player doesn't want to dish out the coin to do it... make fast travel also available to anyone who is riding on a horse!
It's free... but you have to buy, steal, or CATCH a horse.
Now -that- would be a balanced system. Oh, but when you travel... you have to have a chance of getting stopped randomly somewhere along the way for encounters.
Just have your guide-guy / horse appear right there with you, so that once any obstacle is taken care of (or sometimes an optional side-quest presents itself and you can choose to ignore it) you can just be back on your way wherever you go.
Problem solved. Horses relevant. Fast travel balanced.
I'll accept my medal any time.