In advance, I'd like to just say that I have NO intention of making a Total Conversion, and I'm asking this mainly out of curiosity concerning what is the "standard practice" when it comes to making them; I'd appreciate any input people can provide.

What I was wondering was, how do you go about it? For example, would it be just like a normal Mod, with modifications, et cetera, or is there a way to actually make a "clean" version of the Oblivion.esm file which would then be used as a base (so strip it of all the Quests/NPCs/References, et cetera, keeping just the Items, Statics, and what nots)?

Not sure if there is a standard way, but I'm just creating a new world space and using Oblivion.esm as the master. Just change the chargen script/quest to start your player off in your new world space, add custom races, classes, and birthsigns, etc., and you have yourself a partial conversion. Using Oblivion.esm as the master allows you to use all of the static objects, etc., without having to redefine them all. You could create a blank.esm by using the CS without loading Oblivion as the master but I don't see any advantage in doing so and a lot of potential problems and complications. A true total conversion, of course, would require all new assets, including thousands of character animations. Not very likely.

But a true total conversion isn't really necessary anyway. You can do a lot with custom assets and scripting without having to throw the baby out with the bath water. My own mod already uses custom assets, and I will add more assets as I create them. You can always start with a vanilla object and replace it with a custom one down the road without too much hassle.

The biggest problem I see is mod compatibility. I use Abo's realism mods, so, of course, it was important that my mod be compatible with them. Because I'm using a custom character generation procedure, however, I suspect many other leveling mods, etc., will have compatibility issues with Balzu. Some mods can't be made compatible: RGO, for example, has location-specific bounty, but because my mod takes place in a new world space, it doesn't operate. Kuertee's Clothing Matters is another example, with faction disguises tied to Tamriel factions. That doesn't work either. But even though these features don't work, it doesn't mean they aren't changing globals and settings for a player that has them activated that I don't want changed. It's one thing to write scripts that duplicate these features in my own mod, and another to tell the player they have to turn off a list of potentially conflicting mods in order to play mine. And you don't want to tell players to turn off all other mods, because most people won't play it if you do. Loading your mod last won't necessarily fix the problem, either, since you may have written a script assuming vanilla values that are changed by other mods but not overwritten in your mod. (This might be an argument in favor of using a blank.esm.)

In a sense, these compatibility issues aren't any worse than normal compatibility issues for mods that are all based in Tamriel, just different. I don't have to worry about UL changing cells in my world space or some other mod changing a race definition or NPC, but I do have to worry about mods that change things other than Tamriel-specific references.

Ultimately, the technique that you use needs to be adapted to the purpose of the mod. Balzu is a fantasy adventure, so there's no need to go recreating the entire wheel, just some of the spokes. Modders who want to make something completely different may want to use a different approach.

Thanks for the response, that's basically what I was thinking