I just reinstalled Oblivion for the first time in years and played around with it a bit. One of the first things I noticed was some odd AI behavior after entering the Imperial City. Stop me if you've heard this joke before:

A Breton assassin walks into a bar...

As soon as I walk into an inn in the evening, all of the NPCs who were sitting down (about 4 or 5 of them) suddenly stand up and make a beeline towards me/the door. Instead of leaving, though, they turn and walk behind the bar. As soon as each one steps behind the bartender, he turns back around and sits down at a table.

I left and came back, and the same thing happened. I've tried replicating it a few more times, but if it's happened again, it wasn't as obvious as the first couple of times.

Is this a common occurrence? Is there some esoteric configuration in the .ini that is a 0 when it's supposed to be a 1? I remember the AI being a little wonky, but not this overtly strange, so I just wanted to find out whether this was a normal thing and not a symptom of a larger problem.

It's not really a "normal" thing, but I've seen it before. That sort of thing seems most common in the Merchant's Inn in the Market District, when the local merchants all gather there after work.

they're just drunk, have some imagination

That was where I saw it. Glad to know it's not uncommon.

Works for me!

Let your character sit there, then go to the kitchen and make a sandwich. After about five minutes, the npcs go back to their tables and conversation resumes. If that's what you're going for, immersion-wise.