I'm currently running my Oblivion with the previously mentioned mod packs, the UOP, USIP, UOPS and UOP QTP3 patch meshes and textures, and some additional replacer mods, all merged into the original BSAs with no issues at all. Doing this has reduced the size of my Oblivion folder from over 40GB to about 25GB with all the mods I use (about 300 in total).
So would an instruction document be of any interest to anyone?