I agree with many of the OP's ideas, however I thought a useful way of using the dpad would be:

DUP: character system/menu mode (quests, inventory, statistics, map - navigable via L/R triggers) - hold button for map
DLEFT: quick radial menu for left hand favorites
DRIGHT: quick radial menu for right hand favorites
DDOWN: quick radial non-equipped (potions, food, etc) favorites selection

Assigning these favorites in the inventory would be done by holding the corresponding button while in the character system.

X button: dragon shout (see my reasoning below)
LB: (with weapon drawn) block/bash left or zoom (without weapon drawn) zoom
RB: (with weapon drawn) block/bash right (without weapon drawn) grab

In this way, a warrior without an equipped left hand (I know the handedness people won't like this) can now zoom (Fallout 3 style) while having only one right handed weapon drawn. I think zoom is an important aspect of a FP game because it sort of equates as a "squint" due to the optical limitations that video games (particularly FP video games) have of representing a "true" human eye approximation in the depiction of the game world).

Handedness might be able to still be done at character creation, however. At this point it reassigns the LB/RB functionality respectively. I.e. left handers would have RB as zoom and LB as grab without weapons drawn.

I assume there will be some context sensitive control. "Dialogue mode" for example, might be initiated with the A button, but after entering it the keymapping changes to deal with the situation. Drawing your weapon may at this point initiate combat mode, accessing the inventory may access trade mode etc.

I believe that the x button being assigned to sheathing weapons is somewhat ridiculous. An entire button assigned solely to sheathing a weapon isn't very practical (obviously you can draw using X as well, but it's not necessary considering how the triggers work). I think it would make more sense to sheath weapons by holding A. Think about it this way: submitting to an opponent in Oblivion was done by selecting an enemy and pressing A while in combat. This is just the natural progression of this. If you consider that there may be nothing to activate at many times in the game, this gives the A button twice the potential that it had in the previous installment. EDIT: Radiohead's above comment could be implemented with this - hold A while in combat mode (or selecting an enemy) and hold the respective trigger sheathes that respective weapon.

There are other ways of streamlining the system by working extensively with context sensitive keymapping. Such as having an entirely different keymap for dialogue mode (that logically follows from game mode). For example: A (activate) selects dialogue options, B (duck/sneak) exits conversation, DUP (character system) enters trade mode and so on. Much like pressing Y while blocking in combat mode in Oblivion initiated the roll perk (once achieved).

Of course, I'm not saying that there has to be any clear delineation between the different types of game modes, combat mode is simply having weapons unsheathed. It would be interesting, however, that there were options to do things that could only previously be done in menu mode that could be done in game mode (for example: read books!) so that time could progress without having to use the wait function.

Considering that Howard has already been saying that he's looking at superfluity in redesigning the system, I think that this would be more the direction they're traveling.

@Havik wow thats a long post but i actually loved the ideas of multiple uses of the buttons (such as the sheathing weapons as holdin A). u hav alot of interestin ideas that i could see workin in skyrim, and yeah after re-readin a quote from the GI mag im pretty sure the d-pad will be used in some way for the hotkeys maybe even similar to the way u suggested.

I think you'll be able to change them like we could in Oblivion.

Wheres the HUD?

N00000000000o0o0o0o0o0o0o0000000!!!!!!!!

Would you settle for at least a screen blur? I hated that red screen thing until I played breach yesterday and it svcked not having it. If they remove the hud they have to have some way of letting you know. "Your hurt really badly back off or your dead". When I heard no HUD I thought "uh oh auto regen to max HP after combat". Which is awesome for FPS(health pack you wont be missed) but not TES. Since I doubt that is the case this will all be answered when the hubdate comes out.

im jus hopin its not that annoyin red screen that makes it look lik veins beatin on the side of the screen... jus think if that happened and u had no restore spell or health potions, jus walkin around with that ugly screen

You are correct. I remembered it incorrectly. The article says when you approach a NPC a converse option pops up and they continue to do their business. I could have sworn I remembered it saying you could continue to browse the shop...
Though I honestly don't see anything weird about a "dialogue mode." If the NPC's can continue doing stuff as they talk why can't we?

well it could be lik 2 worlds 2 or assassins creed. where u have a little circle u can walk around the npc while they speak to u and continue what their doin

I'm not saying we shouldn't be able to move around during dialogue but that's the decision beth made. Npcs move around but we don't. Either way its better than everyone being frozen.

@havik nice post but your dpad up being the menu and then switching with right and left triggers can't work. They already said the menu works like a four way compass so you press up, down, left, right for skills, map, spells, and inventory.

I must have missed that. But now that you mention it, it does sound familiar. I was hoping for more hotkeyable items, but we'll just have to see what they're offering I guess.

Umm not that hard?... :shrug:

Thats even worse haha

Yes it is. BGS are taking steps forward not backward. They are intuitive and I'm confident the hotkeying will not be that cumbersome.