Here are a few of the ideas I have for how to do that:
1. SPEECHES - One guy could be standing in the middle of some roundabout or square, giving a speech. Dozens of other people could be standing around listening, but not only listening, being actively engaged in that speech. It could be a debate about the civil war raging in Skyrim, and best how to solve Skyrim's political problems, and how the dragons' return has impacted all of Skyrim's dealing. People want to know what changes are to be expected. As he gives his speech, occasionaly, a member of the crowd will interrupt and throw a new question at him. If the player (you) try to interfere, most of the people will be too busy paying attention to the speech and just shoo you off. But maybe 1-2 people will be there who can give you some backstory as to what is happening. If you talk with them, their voice is louder, but behind them, the debate will continue slightly quieter, so you can hear both voice streams at work, creating a real-time event with real-time interaction. A speech given in a town is rare, and no one town will hold more than one speech a month unless its the player's first few times visiting the town. Each speech is unique and egocentric to that town's personality, fears, and needs. The speech has a real beginning, and a real end, where the people finally all get disbanded so that they should return to their duties. Seeing the people actually debating, taking part in politics, asking questions, all without your direct intervention, making YOU the background and not relevant to them, would go a loooong way in making Skyrim feel more real, like it's not all about YOU. Like you're there, but not the center of attention for once. They wouldn't even have to give out quests for this. And if you stayed for the whole debate, you would learn a lot about the history of Skyrim, local politics, the fears of the people, etc ... it's like LORE without the boring and quiet reading of books (unless they've revamped that system in Skyrim, I don't know) ... The gathering of the people for these kinds of events, the interaction of the public with a leader, and the subsquent disbanding, would provide quite a glimpse into city dynamics we've never seen before. I would love it, personally.
2. GRIEVANCES - Some people could be camped outside of local government office buildings complaining about issues regarding the city's handling of certain affairs. There could be people complaining about sewage problems, or the overtaxation problem, or crying because there is some rule declaring that Argonians and Bretons can't legally get married. They could be carrying poorly-painted signs decrying the situation with a catchy slogan, and they may try to entice the player to join their cause, take a walk with them. There could be some kind of city police "raiding" system to raid these gatherings and arrest key members, dispersing the crowd. Or they may have a representative of the ruling elite come out and pacify the audience with a demonstration of understanding for their greivance and a call for all citizens to disband and return home.
3. SUPPLY RUNNING - When I visited Venice in 1992, I noticed how so many young people in that city had jobs running wheelbarrows of supplies all over the city. They had wheelbarrows of fresh fish, with ice poured over them, and they were running them through the narrow streets to shops further inside. Other people were wheeling barrels and were busy working very hard to secure items. It'd be cool if they could work in these kinds of jobs, some kind of moving or dragging animations, or show wheelbarrows being used... then they could show the city unloading supplies, and moving them all over the city. A person with a wheelbarrow or whatever the system should best be for a Nordic environment like Skyrim's, would help create the illusion of a bustling city hard at work, to better replace the lazy, malandering gait of those random passersby in Oblivion's capital city that all seemed to have no purpose beyond wandering about, randomly repeating questions and factoids between each other.
4. BRAWLS - In modern society it's a crime to punch someone, but back in those kind of settings, violence erupting at any moment was a way of life. You never see two NPC's bump into each other and then go about talking sh** with each other before throwing down. It'd be nice if, instead of every citizen greeting each other in that overly friendly dreamlike trance, if they were like real men, a bit gruff, a bit easily offended, ready to prove their stuff. I know we have duels in, but what I am asking for is some of the negative interactions that happen BEFORE it comes to the duels at all. Or you're walking by a market and someone is suddenly very pissed they couldn't get the price they wanted, and knock the basket of fruit all over the street and march off in total huff. That's normal. That's what you expect to see in a harsh city environment built around strength and violence as was in the Nordic days. Oblivion's overly gentle and baby-ish conversational dialogue was too perfect, where was the grit? I think Skyrim needs this kind of grit to really set the mood. I'd love to hear someone suddenly shouting about something that really pisses them off, and then they go storming away. Or you enter a bar and two men are already throwing down, nearly killing you even as you've barely cleared the door yourself. Or someone didn't like the product they just bought (make some "snake oil" they were sold, and now they want their "god-da**ed money back!" or all Hell is coming!)
Those are what I've got for now. Let's hear some of your own suggestions, if any. Thanks!