It's been a long time since I have played Oblivion and I am sure there are certain important things I am forgetting.

What tips would you give to someone playing a sword and boarder coming from Skyrim?

Also, I cannot remember if using steel weapons and armor on the default setting is viable or not. I don't want to use the fancy armor at all.

How about mithril? It is light armor, I know, but is it viable for me to do that? I love the mithril set in this game.

EDIT: I forgot to say I wanted to play as more of a paladin. Sword, board, restoration. Any tips on levelling or other things would be cool.

You can get by with mithril, assuming you develop plenty of skill with light armor As a sword and boarder using light armor, you will simply have to repair it frequently.

A steel sword is fine as long as you enchant it and keep it charged. A great enchantment for a paladin with a long sword is absorb health, but shock will work in a pinch - include soul trap to help keep it charged by smiting down and using the magical energy of your foes. You not only will need the extra damage that enchanting provides, but any enchantment will allow the steel sword to hurt ghost type foes. For looks, consider upgrading to a fine steel sword - they are quite beautiful.

If you like the look of mithril for your paladin, you might consider the Divine Crusader armor (if you have access to the Knights of the Nine DLC). At least take a look at it.