Aside from the quests, if you ever spend the time just wandering around Oblivion, you'll find it very difficult to have a proper battle out in the open, as campsites rarely spawn more than 2 bandits at a time. Usually, it's just one bandit and a (weak) dog.
I've found it MUCH better to add an extra bandit or two (or sometimes more!) to each campsite as you really get more out of the experience. Same goes for the wilderness, I prefer fighting PACKS of wolves rather than just one. I can't imagine playing Vanilla Oblivion again, mainly because combat in VO is just too easy.
Thoughts?