You're right in that it shouldn't be necessary to create new space in order to mod. The real problem with Oblivion was that there were lots of dungeons that weren't unique. I'm all for the idea of more limited dungeons as long as they are more compact/detailed and are actually interesting. If the space is utilized correctly no one should have complaints, modders and non-modders alike.
And I understand the roots of TES are with PC's, but when Morrowind came out on the Xbox that changed. The fact is that some avid TES fans have never played it on the PC, and besides that, some PC users don't use mods. Mod use isn't necessarily as universal as it might appear on these forums.
My personal issue with landmass/dungeons index is that the wilderness in most places is dungeon with another place only a stones throw away. in some places it was so bad as there were normal npc locations nearly touching a ruined fort and it is totally unrealistic. I dont think it would be as much as a bother to most people to have a larger map with more open spaces between the same number of dungeons as it would bother people who feel that every thing is to close to each other. And its not an issue of land mass takes too much time to make, because with the tools that the devs and modders use you can make a Bravil sized area in only a couple of seconds, and fill it with plants and rocks in a minute or two.
Modders dont need wide open spaces in the world to mod a dungeon, all they need is room to add in a door to the world. This then takes you into the dungeon which can be as large as you want.
For me Oblivion was not cluttered, yes the MAP looked cluttered if all locations were found, but in reality when 2 dungeons looked like they were right next to each other on the map they were really a fair distance apart when in the game, no they were not miles apart, but far enough to not seem close.
The main problem was the compass highlighting dungeons that were close by, even if you had not been there before. I hope this is something that is removed from Skyrims compass. Feel free to highlight explored dungeons or places but not those that have yet to be found
not all mods are just new dungeons. most exterior mods are things like new buildings or forts. besides, thats only true if your making a cave. any thing else takes much more space than just a door, especailly ayleuliod (sp) ruins.
the map did not just look cluttered (I am talking about the actually map but not the ingame one you use for fast travel and such) it was cluttered. there were several places where a settlement and a monestary were right next to a dungeon with badies walking around that would either kill every one or just ignore them. both svck when they happen.
I agree with the map markers revealing locations to easily, but I think this is mostly dev error since some marker spots don't match up right to where the location is, I think it should remain as a system but the area should be much smaller. I am not too sure about the compas part because I think I would miss it even thou it is not realistic.