I was wondering if it would be possible to force Oblivion to play a certain music-file from it's music folder on demand? For example, suppose I'm in a battle and the battle music is playing, would it be possible to script a Key to cut-off the Battle music, and switch to another piece on press? I know we can play sounds, but they usually play along with the background music, if memory serves...

Yes, I think you can do it. Look at http://www.tesnexus.com/downloads/file.php?id=26892. It makes you able to make special playlists when you are in certain locations, like Dementia or Mania, Inns, The Jerall Mountains...
Anyway, It requires two OBSE plugins. I think you can read what were those plugins reading the description.

You can use the http://cs.elderscrolls.com/constwiki/index.php/StreamMusic command (which does not require OBSE) for this.

StreamMusic is very buggy, so if it doesn't work, don't be dissapointed.