Here is a little issue that could mean consequenses to future Oblivion modding:

Anyone into the mega must have mods like FCOM, Unique Landscapes and Better Cities knows that oblivion has a strict, will not start if it is exceeded, mod limit of 255. However: is the actual mod limit where oblivion begins to have problems actually less than that? Here's something I found when attempting to play a heavily modded Oblivion: I discovered what seems to be a reproducable crash when the Oblivion mod count got up to 200 or more.

OK, here is the situation: I recently got a new computer (Windows 7, 64 bit) and went about moving my Oblivion install to it, taking the opportunity to start afresh with the most talked about mods out there. I followed the 50 Steps to Crash Free FCOM installation (almost, there where some of my own mods that I just had to add), added QTP3, RAEVWD, Tes4LodGen, Better Cities, Deadly Reflex 5 and seemed to be going quiet well, until I started to get random crashes after a few minutes of play time. I got tough: I ran BOSS and I used Tes4Edit for cleaning all the mod that the cleaning guide said to clean (In fact, I cleaned all mods except the ones the Tes4Edit guide explicitly said NOT to clean), I used Tes4Gecko to merge some of my favourite dungeon and tweak mods together (just scraping in under the 255 mod limit there), rebuilt Bashed Patch (several times), and I updated OBSE to version 18, Pluggy to 125, got the latest version of Streamline (3.1), weOCPS, 4 Gbyte Patch, etc... But I still had the annoying crashes. Then I followed the old Unactivate Everything and Activate You Mods One by One to find out which mod was causing me problems. That when I hit this weird problem:

You see I had a reproducable problem with CTDs. From my clean save (read: just exited the Imperial Sewers, Only the official DLCs, all of them, loaded) if I loaded up all the mods I wanted to use and moved into the water to attack a lone slaughterfish there, the game would crash (if weOCPS was disabled). When I tried the same thing in a clean game with only the official DLCs, I could kill the Slaughterfish no problem. With all the mods and weOCPS, I would here the error beep, the game continued for a few seconds before crashing, but the escape menu, inventory, searching corpses and saving where suddenly disabled. The line in the weOCPS.log was as follows:

(Note: this error was repeated several times if I tried to keep playing)
That was the first entry. After that, if I didn't kill the game with console: halt, I got the following error a few seconds before before CTD:

Now: here is the bit the title refers to: When I began activating mods one by one, I could get up to 199 mods no problem. Activate all of FCOM (with Frans, MMM, OOO, WarCry, Bobs Armoury, Loths Blunt Weapons), all the Unique Landscapes, Better Cities with Blood and Mud, Deadly Reflex, Cobl, Some of my favourite dungeons (I merged a few of them) and there was no problem I could kill that Slaughterfish without a CTD / weOCPS error beep. As soon as I got to that 200th mod, however, weOCPS beep, followed by a CTD. It did not matter what the 200th mod was, just attacking that Slaughterfish would cause the dreaded beep and the inability to do anything else. Thievery? Walkabout? Knights Armoury? All of them gave exactly the same problem.

Edit: actually, not all of them created the problem at the same mod count: some, like thievery with the Better Cities Patch or Sutch Reborn could hit this error at 199 mod, while some, like Glenvar Castle could get up to a 201 mod count without crashing. Maybe it is a limit to some sort of object list in game that keeps overflowing...

Some people have different limits.

However, as an experiment, go through your Data folder and see if you have any unnecessary files. If so, remove them.

Also, after building your bashed patch, turn on Wrye Bash's auto-ghosting feature to see if that helps with the issue. It will hide any merged mods from Oblivion.exe

The limit is about 375 (+/- 25 ) BSAs, ESMs and EPSs you can have in your Data folder before the game starts acting wierd.
Use the Ghosting feature of Wrye Bash to temporarily change file extension of inactive files.

I didn't see mention of it, but are you using Oblivion Stutter Remover? If so, and you have the memory to spare, try setting your heap to 5 and raising the heap size from whatever it is up to 1024. I had a lot of random unexplained crashes up until tweaking those and using the LAA patch in Win7 myself. Since then, barely a peep. The occasional one-off crash and one consistent little booger out SE of Kvatch, but otherwise entirely stable.

If that's not it, then you definitely need to count up your ESM+ESP+BSA files and find out how many you have in the Data folder.

Well, a file limit could definitely be an issue. I am counting 26 esm's, 322 esp's, 57 bsa's (Including the official ones).

Will try out the ghosting feature.

It does not matter whether or not the BSAs are official. You are right within the 300-400 range of total plugins and BSAs that causes major problems.

Actually he's over the hard limit at 405 files. Something has to give at this point.

@ShadowMagus: 57 BSAs sounds like an awful lot. Can any of those be unpacked into loose files instead?

Good news: the suggestions raised here worked:

I checked the auto ghosting feature in Wrye Bash (I wasn't aware it existed before) and upped the heap size in Oblivion Stutter Remover to 1024 (Thanks Arthmoor), and Oblivion no longer crashes with my emmense number of mods. I did both of these fixes, but I think it was the Auto Ghosting that fixed the issue.

So there you go, people: If you ever get error 0x0003962b from weOCPS.log, time to turn on the Auto Ghosting Feature.