Great new update! It's fun to hear about all the technical bits going on behind the scenes. Be sure and check out the animation demo video Havok has on their site for the Behavior animation engine:
http://www.havok.com/index.php?page=havok-behavior
It's so fluid and really adds character. I hope the giants moves something like that big guy, he "feels" intimidating. They also mention that animation can be reused for characters with different bone structures...to me this instills some hope we get beast races with the crazy legs again! They have a great solution with the animation engine so all they would have to do is figure out a way to make the armor fit properly. (I think those were the two reasons for the change in Oblivion)
Glad we finally have a public screenshot to discuss! I can't believe they cropped the best part off in the magazine (that tower wow!). My guess is that this is what is mentioned in the magazine as one of the old Dwemer ruins carved into the mountains that was converted into a Nord town. We can't really judge if it's a still a current town or ruins based on that shot, the lack of NPCs is odd. Perhaps they disabled them for the shot for some reason.
The Radiant ai/story seems like a natural extension of what we have already seen. I like the fact they are adding randomness back into the game. Going back to Morrowind or Oblivion it's kind of depressing that I know exactly what is going to happen in every single quest lol! Perhaps I have played them both too much!
Overall great update, makes me want the game even more!