I have no idea if this would even work but here goes.Instead of using Radiant AI for every NPC have the majority have a basic version(eat sleep job cycles) and have them slaved to an NPC with an advanced/in depth AI.This NPC would set the tone for those slaved to it.(normal,alert,flee)

This would save on processor resources in exterior cells allowing for more NPCs in those cells.It could be made the default setting for interior cells such as home and shops as they are usually not heavily populated and the resources would not be an issue.

The Morrowind AI was incredibly bad, but the random actions and animations occasionally made for humorously inept moments. I recall having used a longbow from ambush to one-shot a bandit in a group of three, and the second one turned toward his fallen confederate, then commented "Probably the wind".

Oblivion wasn't much better in this respect. Immediatley following the final incident in the heart of the Imperial City, with corpses of men, mer, and daedra, including the remains of gods, all strewn about the street in heaps, one passing urbanite remarked "I saw a mudcrab the other day.....".

Sherlock Holmes they're not.