I am tired of this immersion braking feature, is there a mod that makes it so that nobody is essential?

I could post you a quick OBSE script to remove it on the fly while you play, but in my opinion the essential tag does serve a purpose, though I admit that the devs abused and abuse it to get away with very shoddy quest design.

EDIT: actually I recall there is an Oblivion.ini setting that can control this, it might be changing bEssentialTakeNoDamage=1 to 0