Yeah it wasn't the collison: http://img64.imageshack.us/i/bookw.jpg/ it was the implementation that was bad in Oblivion.
As said it was much better in Fallout 3. Also, it was the fact paintbrushes had no mass in their properties, which made them float - not the engine.

I think the Thread starter talks about rocks and trees not place well in the CS but floating somewhat from the ground.

Nah, it would be steal something off the table, or off a shelf somewhere, and the other items near it seemed to float. Drove me nuts. Essecially when I stole when people were around, i would be crouched down, and thus get a nice eye level sight of the table, and watch everything jump. If that doesnt attract attention to you stealing, I dont know what would. Its the same as someone taking a picture off your table at home to look at, and lamps start flying around. Pretty sure you would turn and look.