MGX XE has a setting that makes the crosshair disappear when not in use. I really like this feature. Anyone know of anything similar for Oblivion?

I've never tried it, but there's http://planetelderscrolls.gamespy.com/View.php?view=OblivionMods.Detail&id=1681. But are you using any UI mods like Darnified? I would suspect they might conflict.