Guys, I'm pretty sure this has been asked before but I can't find anything related. Did the soft shadows ever get modded back in the game, as seen in the http://www.youtube.com/watch?v=de1M4Q_g2eg demo?

Well, http://www.youtube.com/watch?v=2eKzwKFlz8Y. However, if I remember correctly, shademe ran into a few complications - namely, that the shadow system in Oblivion doesn't properly account for overlapping shadows, multiple light sources, and is pretty glitchy even with that aside. There's a bunch of screenshots in the older OBGE topics, if you want to take a look. Note that the torch in that demo doesn't seem to cast any shadows of its' own.

Perhaps the shadows were too slow, regardless? That video was, after all, of the PC version - they might've cut them out because they couldn't get them working at a good speed/resolution on consoles/average hardware, for instance. Personally, I kinda wish it were possible to give Oblivion shadows like http://www.youtube.com/watch?v=YwmAIfL_yoo#t=1m10s.

I'm no expert on these things, but my understanding is that the actual code for the shadows seen in the demo was removed entirely, so it would not be simply a matter of just activating something previously deactivated, I'm not sure how it's done in the video linked to above, but I think it was probably done using new work created by the modder, in any case, I don't think it's released and I'm not aware if there's still any effort being made to complete it, or a similar mod. Regardless, it does seem to indicate that it WOULD be possible to implement dynamic environment shadows in Oblivion, it's just a question of whether whatever things kept the mod used to create the shadows in that video from being released could be adressed, and whether anyone will do it.

This is correct. Bethesda didn't simply scale back the shadow system, they took it out and replaced it with an entirely new system.

In the shader-defines for the shader-packaging, it's possible to see that they at least had experimented with shadow-volumes (stencil-shadow, carmacks inverse).

Thanks, this definitely answers my question. Sadly.

Well, I don't think all hope is lost for seeing a shadow mod released in the future. Since shadeMe ran into the various issues implementing shadows Ethatron has done some wonderful stuff dissecting Oblivion's shader system; it's possible the problems may be able to be resolved with the power of OBGEv3. I have no idea though since it's been a while since I nagged shadeMe about the status of the project, I suppose he or Ethatron could explain the chances of seeing shadows in a releasable form in the near future.