Some good news, and a call to help with testing...
First, the good news: I think I managed to fix the issue with FPS dropping substantially when many NPCs are in view - turned out I had to order the vertex map slightly differently. It's a very small thing, but it apparently makes a huge difference. This will be included with the next release.
Vertex cache optimization testsNow, I've also started experimenting with an optimization scheme which does not optimize strip length, but which optimizes the vertex cache instead. This may lead to slightly larger files, but with better data locality, and therefore taking better advantage of the cache, leading to higher fps rates and a smoother gaming experience. I'm not sure how much additional gain there is to be expected, but in the best case it could be as much as 25%. Realistically, it may be closer to 5% to 10% gain because the stripification algorithms (such as NvTriStrip) often improve locality already by joining strips into patches. An extra boon is that optimizing for the vertex cache is *much faster* than trying to find the longest strips (there are linear-time algorithms!!). So, the optimizer will also run faster, definitely once I've profiled the code (I still have to do this...).
Still, there are different ways to represent such cache optimized geometries. In total, I've coded 4 different versions, as I'm not sure which approach is better. I'd be very grateful if some of you - particularly if you have a low-end video card!! - would want to test each of these and get back to me with your results: it is definitely worth trying this on many different types of hardware, and mileage may vary. But I hope one of the versions will be a clear winner...
Installers for the different versionsBelow are links to the installers for the 4 different versions. One of them actually does not optimize for the cache, yet I've included it since it could be that on very old hardware the benefit of cache optimization is not as much as the benefit of having longer strips (this could happen for example if the cache is extremely small).
http://www.sendspace.com/file/t3abjj
http://www.sendspace.com/file/0u2y7b
http://www.sendspace.com/file/w1km3g
http://www.sendspace.com/file/4wh4v3
Posting your resultsI guess most of you know this, but to see frame rate in Oblivion, start the console (tilde key), enter "tdt" and close the console again (tilde key). Obviously higher numbers are better.

It's easier to collate all the information in a single place, so, if you have a sourceforge account,
please post your results on the tracker webpage rather than in this thread:
https://sourceforge.net/tracker/index.php?func=detail&aid=2994654&group_id=199269&atid=968813
On the tracker page you can also follow the progress.
Thanks in advance to anyone who helps with testing this!
EDIT
@Elenhil: I forgot to mention, but all the above installers also include the new collision optimizer (which is pretty well tested by now, still some bugs in it but nothing you'd notice in-game). Just pick the first installer, and optimize in the usual way, if you want to use it (this one doesn't yet include the vertex cache optimizer so is most stable, and has least chance for bugs).