Or maybe have them only greet you if you're facing them. Kinda annoying walking through a city and everyone's minding your business. "What do you want?", as I walk by ten feet away.

I know there was a mod to do this for Morrowind, but I can't find one for Oblivion.

I'd give this one a go - 'Social NPCs' - not the most intuitive name but seems to fit the bill

http://www.nexusmods.com/oblivion/mods/31319/?

Thanks.