You guys do realize that Oblivion was made using an upgraded Morrowind engine?
As a programmer myself, you do not throw away old code. You keep it and upgrade it. And believe me, upgrading something just a small bit can make a world of difference.
Edit: And no, the engine is only "new" in that its upgraded. Its not actually a totally new, out of the box engine. We already know that.
Yeah, I'm with you on this. They sure make it sound like it's a built-from-scratch new engine, but that feat alone would take a couple years worth of development - which makes me wonder how much old code will be reused. As long as the annoying quirks of Morrowind and Oblivion are a thing of the past, I'm fine with not making this distinction.
You are in all respects completely incorrect sir. Bethesda didn't even have the new engine (they had to guess how it would work since 2002) for Oblivion until close to the launch date (part of the reason it was delayed from a Holiday 2005 release to early 2006). There are similarities, but the engine is complete and significantly different from the previous. This also goes for the new engine for Skyrim. Bethesda prides themselves on making huge advances in their games, and they seem to especially like testing new things with TES. These aren't just simple upgrades. These are new, improved, and significant advances in technology for their new engines.
I think what you meant was the specs for the console hardware. The engine is what controls rendering, which, as has already been mentioned, would have made it impossible to develop without. It would be like trying to build a house without the 2x4 studs.