I was not attempting to make our postings into an argument. I was only clarifying how the game operates, that's all.
There is no way Absorb can do more damage to a target than elemental magic thrown at a target that is affected by both Weakness to Magic and Weakness to element.
Of course Absorb Health does have the advantage that it heals you at the same time that you're doing damage. And if you manage to hit multiple enemies with one AoE the healing can be very powerful (as you show in your example about Kvatch). So yes, it might be safer. But the raw damage output of stacked elemental spells is unrivaled.
After 3 castings of 100% Weakness to Magicka and 100% Weakness to element your target will have 1100% Weakness to Magicka and 1100% Weakness to element, so any damage you do will be multiplied by 144 (a Snowball spell will do 1440 Frost Damage, a spell with 100 magnitude would instantly kill Mehrunes Dagon). And two spells will already give 600% Weakness to both Magic and element which will multiply any elemental damage you do by 49. Note: you need two different weakness spells with identical effects and you need to alternate between them to get this effect. If you just cast the same weakness spell three times you'd only give your target 500% Weakness to Magicka and 500% Weakness to element (and two casts would give only 300% weaknesses).
Well, I am reporting on what happens when I play, and I have played thousands of hours testing the game mechanics repeatedly with different approaches. Note that I have stated that I do use WtM with Absorb. Yes, it is far more effective at damage dealing than elemental blasts. Why? Because you do not have any worries about 1) resistances to elements and 2) missing the target. The only problem you ever have is with reflect spells. Even absorption of spells doesn't matter because it just takes longer. But the stacking of WtM on the Absorb effects is deadly because the effects continue to do more and more damage each casting. Your math is right, I think, but you are not addressing the other issues of actual gameplay such as missing targets with ranged combat, resistances to elements, and being interrupted by enemy attacks (and perhaps others I have not mentioned). The approach I've mentioned eliminates all of those possible problems, and the result is more effective overall. It isn't the only way, of course, and your way certainly works, too. I never said it didn't. I simply pointed out that using the Absorb approach is more efficient and reliable, and does more damage in actual gameplay. Note that Absorb includes both Magicka and Fatigue, not just Health (I create spells that do all three at once)
Note that I have also stated I do use ranged blasting and, in fact, I prefer to do that as far as my character personalities are concerned. Unfortunately, the game does not really cooperate in many instances. For example, if you are going through Oblivion caves or other types of indoor areas, it is seldom possible to avoid being in melee range. Even if you manage to do so at the start of an encounter, groups of enemies coordinate their attacks and some will close on you. It just isn't worth the bother and potential problems, and using Absorb (Health + Magicka + Fatigue) and Weakness to Magic eliminates the enemies far, far faster than any blasting with elements can do.
Again, I have done it both ways, and this is what I have experienced in my games with my characters.
I never said anything about melee combat. The only mention of melee was that my mages don't want to get into their foe's melee reach. Meaning they stay at a distance that is long enough that their enemies can't reach them with melee attacks.
Note that I agreed, too. However, actual gameplay frequently prevents us from dictating that that is what we are allowed to do.
Most curious. When I hosted the Deadliest Warrior competion we found Conjuration to be overpowered because the AI always went after the summon, as can be seen in http://www.youtube.com/watch?v=FZjv_JlYAOQ.
Well, not in my game, unless I turn invisible. That is the only way to reliably force the AI to focus on the summons. It's not like I'm making it up, you know? I'd love it if this was not the case, but it is. The only exception has been in indoors settings where my Conjuration was at max and I summoned Storm Atronachs that blocked the passage. In such a case, the AI had no choice but to deal with the summons first. Then again, I could also turn invisible, so it was a matter of choice of how to eliminate things.

I do not do video capturing due to copyright concerns and my own personal choice to adhere to such restrictions.
I should add one thing, although I would not think it would be true. You use the arena as an example, but I never use the arena and am only speaking of actual gameplay in the gameworld. It is possible that arena encounters might behave differently due to the setup. I have no idea. As I said, I would not think so, but I can only report how the AI behaves in actual gameplay in the world (i.e., through Cyrodiil's environments as well as in Oblivion gates).
One othet thought occurs to me. You seem to power level. I have specifically stated that I am not talking about someone who power levels their characters, but only about playing and developing through more or less normally paced progression. In other words, you do not have conjurers with Flame Atronachs at level 3 or Clannfears at level 5. That is power leveling and is not part of my consideration. If I were to add it, I would simply say to do the same thing with the schools I talk about (Illusion, Restoration, Destruction) and you'd have an equivalent but more efficient method, in my view and experience.
This is important because, as I think I mentioned someplace in this thread or elsewhere, the AI seems to evaluate threat level. If you are a low level character summoning a high level creature, obviously the AI homes in on the summons because it is the higher threat. However, this will never happen unless you deliberately power level Conjuration and go out and buy those high level summons spells. If you develop through a normal pace, it is your character who will always be the greater threat and thus the target of the AI. This may be why we have different experiences. However, more importantly, it also demonstrates why Conjuration is not inherently overpowered by any means and, in fact, is weak compared to other schools. The only way to get the summons to be the target would be to turn invisible (as I've said) or to do this type of power leveling so that your summons is actually more powerful/higher level than you are (and thus a greater threat and the target of the AI).
As an example, this video shows a Headless Zombie. That's a high level summons, pretty much (Journeyman, skill 50, minimum). If you get to that level at low levels (below level 10, for example) then it is likely that the AI will (rightly) evaluate the summoned headless zombie as a higher threat than you. However, this is not inherent to Conjuration as a school and only applies if you power level the skill in order to summon creatures beyond your level. In contrast, Illusion allows you to Command Creature with the same effect but for ANY creature. Same with humanoid (which you cannot summon at all). Yes, you have to keep casting it because it costs more (for commanding high levels, anyway) but that also means that whatever you have commanded will be at least your level and very likely higher, which means enemies home in on the commanded helper as the greatest threat, not you.
Can you elaborate on the exact mechanic on how one fortifies Intelligence or Magicka to insane amounts? As far as I know the magnitude of a spell is still limited to 100 so you'd have to make half a dozen or more spells and cast them one after another. And then recast them when the duration expires. Unless there is something I'm missing this simply sounds to tedious for my preference.
And for the record, you have convinced me that Restoration is an effective skill for killing enemies, I just personally prefer to blast things from a distance. Maybe the main reason why people don't use Restoration offensively is in the name. It's just more natural to use a skill called Restoration for healing and a skill called Destruction for killing.
The process described by one reply about making multiple spells is one way to create a large magicka pool but that is not what I was refering to at all. In fact, that idea works as far as making a large pool but casting a single powerful spell is not at all efficient in Oblivion. I have tested this and this is what I learned. Basically, there's very little point in creating a large temp pool of magicka and casting a single major spell because the overall impact on foes is simply not worth it compared to another approach.
Instead, you spell chain. Or spam, if you prefer. You use Fortify Magicka and/or Fortify Intelligence to create custom spells with other effects PLUS a temp pool that is used as the pool from which the spell is cast. As long as your total spell casting cost is half or less of the temp pool amount, you can cast indefinitely.
Maximum for the two Fortify effects is 100, so total max size of the temp pool is 300. This allows custom spells that cost a max of 150 to be cast indefinitely. It is very easy to make very powerful spells that cost 150 or less, especially when using inexpensive effects such as Invisibility. I have made custom spells that allow me to continually cast huge boosts to my strength to carry loot, large damage for elemental attacks, huge damage from Absorb effects and Drain effects, etc.
Of course, knowing how to heal things also means knowing how to hurt them.

And Destruction isn't automatically destroying in a literal sense. As Delphine Jend points out, it's important to "understand the creative uses of Destruction magic." Of course, she also adds that "blowing up things can be ever so much fun!"