I'll reiterate my position that I've posted in several other threads on the same topic. Go back to the Daggerfall system. It was to me the most practical. It gave you the sense of your character actually traveling and not magically teleporting. You had options to stay in inns or camp out. Obviously if you stay at inns it will cost you money, but you would have less encounters. You had options for riding your horse, which reduced the time it took to get to where you wanted to go, but you had to buy a horse for that. You could travel on foot, both cautiously or recklessly. Cautiously meant fewer encounters, recklessly yielded more encounters. It just gave you a sense that even though you weren't manually trekking that distance, that your character was. And encounters made it all the more interesting. Which of coarse hearkens back to old school rpgs. Traveling the world map in most rpgs usually lead to encounters before you reached your destination.
yeah that's definitely a very common thing in fast travel that Oblivion left out. If you had random encounter's where you got ambushed or something it would make the fast travel much more interesting. I liked how in daggerfall the travel doesn't seem instantaneous. your travel would take days especially if you had to cross the Iliac Bay without a ship, and if you were sick you could die mid-travel.
I would prefer neither but Daggerfall's fast travel is definitely superior to Oblivion's imo