Someone over in the Hardware/Software thread stated that adding this setting under the "General" heading in Oblivion.ini will enable Oblivion to recognize how many CPU cores are in the system. (This setting isn't listed in the default INI.) I have two questions:
(1) Does anyone know if there's any truth to this?
(2) If so, does it have any impact on Oblivion's performance?

I would think that, if there were any way to get Oblivion's game engine to use multiple cores effectively, it would have been found by now. But this makes me curious.

IIRC, it only works up to 2 Cores. And, this setting is only applicable to increase stability, not performance.

In fact, some people used it to force the game to run on one core as that was more stable for them.

However, it is an easy change to make, if the game runs better for you, then keep it, if not, then take it out.

This. Plus there's only a very small handful of settings that actually utilize the second core. If you just search the ini file for the string "thread" you'll find them. Unfortunately none of them have to do with AI, so I've never seen any noticable boost from using them. Still, why not try? Good rule of thumb is to keep track of any ini edits you make though, or just backup your whole ini file so you can restore it (what I do).

I never heard this. Would like to try it out. What are valid numbers to use? 1,2,4 ?

I don't have my ini file available at the moment, but if I recall I tried these settings (found/copied from here:http://www.uesp.net/wiki/Oblivion:Ini_Settings)

bUseThreadedBlood=1 (default 0)
bUseThreadedMorpher=1 (default 0)
bUseThreadedTempEffects=1 (default 0)
bUseThreadedParticleSystem=1 (default 0)
bBackgroundPathing=1 (default 0)
bUseBackgroundFileLoader=1 (default 0)
iNumHavokThreads=3 (default 1)
iThreads=10 (default 3)

But even they quote an article saying they found no benefit from using them. I haven't noticed any change either. (You would think at least moving particle effects to a separate thread would help, but no...) OSR + Streamline + FastExit2 so far has done the most to improve my game performance.

I meant the inumhwthreads line. I tried it out and the tweak seemed to give me more stability. I made it across the map twice walking around and didn't crash once.

Hmm. You could be right. I wasn't really looking at stability, just hoping for better fps. But since you mention it, I think I have been getting fewer crashes with it in. As CCNA says, it's an easy tweak to try. I set iNumHWThreads=2.