It's something I've always enjoyed while playing Japanese games - Places and events are defined and have an overall more engrained impact specifically because of the mood set by the song. Music has a huge impact on the mood a player may feel. I loved the feeling of returning to say, a beach town, because it always had a certain vibe which was created by the music. Zelda and the Tales series are both games that frequently do this.
In Oblivion and Morrowind, (correct me if I'm wrong) We have compositions set to defined actions or places, but not to the degree of specificity you often see in other games. You'll see "Town" songs, or "Dungeon" songs, or "Combat" songs, but never "Dagoth Ur Battle" or "Balmora Theme"
Jeremy Soule is in my opinion a fantastic composer. I wonder how employing more themes for specific places (one song specific to every town) would impact the overall quality of the score. Would producing more music produce a negative impact at all?
Do you want places and events to have their own theme? Or were you fine with the way previous games have presented themselves musically?
Ocarina of Time End Battle - Spoilers if you've never played it. (what's wrong with you!?)
http://www.youtube.com/watch?v=3SPfSBhVf60&feature=related