My mistake, it's only compatible with v1.1, and OBSE doesn't work, you're right.
With a bit of fiddling it is actually possible to run patched Oblivion with OBSE and Oldblivion. Last year I put 100+ hours into an FCOM game with this setup on a 1.6GHz Celeron and an Intel GMA 950. All the info was on the Oldblivion website I think. I'll have a look...
Edit -
http://www.oldblivion.com/?page=docs&title=Oldblivion+with+Patch+1.2
OBSE...
Spoiler Quote
move the: Oldblivion.exe. .Dll and .CFG files, and the shaders.sdp, oldblivion.dll.log and oldblivion.exe.log files into the folder C:\Program Files\Bethesda softworks\Oblivion\ or the equivilent location on your system.
running Oblivion with Oldblivion and OBSE with a shortcut
make a shortcut for obse_loader.exe
right click the shortcut and choose properties.
now edit the target field of the shortcut by adding -old to the end of the line. Remember to leave a space before the -.
It should look like this: "C:\Program Files\Bethesda Softworks\Oblivion\obse_loader.exe" -old
Note the placement of the command line parameter '-old' out side of the "" in the target field. Be sure the path is correct and points to "obse_loader.exe".
and starting in:
"C:\Program Files\Bethesda Softworks\Oblivion\"
Now if all is right when you click OK the shortcut should work. You might like to change the Icon to something more like Oblivion.
Just don't expect it to be pretty :whistling: