That water is terrible compared to Skyrims. Have you even seen the actual water in Skyrim? Let me guess, you think that the white water rapids is what water looks like in skyrim? Those are white water rapids, they are supposed to be opague and they look a damn sight better than anything anyone else has done for white water rapids, especially for the console.
Erm... You haven't seen the actual water in Skyrim either. Screenshots, maybe. The new trailer hardly shows "actual" water. The water flowing on the dungeon floor looks really nice, with good detail and specularity (Oblivion's water really lacked nice specular), but it's simply an animation just like the water rapids. The rapids still look pretty bad, IMO.
I can tell you from what I can gather in the trailer, there is nothing you can show to somehow prove that the MGE water is "terrible" compared to Skyrim. You can't even prove that Skyrim uses water that isn't just an animated normal map. In case you didn't notice, the MGE water has fully 3D waves, with full-on per vertex animations and everything. The poly counts needed for decent water with animated vertices is extremely high. Note that hardly any console games use this kind of water. The MGE water only got that good after years of hacking Morrowind and many hours of hard work. So to call it terrible is equally absurd and amusing. Mostly because there are many elements of MGE and OBGE which exceed their successors. MGE had full-on shadows before Oblivion did. We're currently working in OBGE to bring both better water and shadows to Oblivion as well. In fact we may have both better waters and shadows added to Oblivion before Skyrim comes out.
I myself have added much-improved underwater effects to Oblivion:
http://www.youtube.com/watch?v=JCoSw7hGAF8 (Video is pre-surface water shader replacement)
And with Tomerk's work on the actual water surface, it's even further improved:
http://www.youtube.com/watch?v=A8o4W6aRTxs
http://www.youtube.com/watch?v=YNrsDNuY1Q0
The last two are both extremely preliminary (I even have the videos unlisted), but in regards to the first video, I doubt even Skyrim will have added these niceties to Skyrim's water. So we're just going to have to hope for an "Extender" project just like MGE and OBGE before it.
From the brief glimpses of Skyrim's water in motion (1:27-1:28, 1:43-1:44), it appears to me to still be a 2D plane with an animated normal map. I don't know how you can say that well-implemented 3D water is "terrible" compared to well-implemented 2D water. Water isn't 2D! The screenshots also show a lack of full reflection LOD, as in Oblivion, where you had to turn on the extra reflections in the INI file.
But the fact still remains... You can't make any comparison to the MGE water (which is nicer than 90% of games' water) and Skyrim's water which we haven't seen at any kind of length and in any kind suitable level of fidelity to make a comparison fair. There is simply no basis for comparison.