What I hope to do is to have a few number of LODs for a building, where it's detailed when viewed close and replaced by a medium quality model a little further away, and finally an even simpler model further than that. I've used that LOD system before perfectly in other game engines such as UDK and Cryengine, not sure if the same can be achieved in Oblivion. It'd really kick ass if someone could enlighten me on that.