Apart from some bugs with oblivion that can't be cured on xbox, there's nothing wrong with this game (IMO). I can understand wanting to updating some of the graphics for people who can't mod their game (i.e console players), but wanting to alter the game play to make it similar to a newer and fancier game in the series, to me, takes points out of playing the game in the first place. The game play makes it unique, and role playing it means back in the times of oblivion no one thought of fighting the way they now do in skyrim. And it'd be pointless to remaster an entire game just so little things like character customisation can be better when people created mods for that use.
As many have already said, the time it'll take to remaster an already decent and still fairly recent game is time much better spent on new games. There's still the provinces of Summerset Isle, Valenwood, Elsweyr and Black marsh to play if they work on more projects.