.....or what should be made.....
I think the sneaking system in Oblivion is rather badly implemented (I still love sneaking around caves and such, though). In real life, you don't have to be crouching to be not sneaking. Instead I think there should be different animations, like while walking against a wall you would press your body up against the wall and spread your arms across it, strafing sideways. When you are out in the middle of a hallway, you should walk sort of crouch (so crouching isn't totally far-fetched, but still) tip-toeing, or trying to muffle your footsteps. I think you shouldn't be able to disappear from your enemies after attacking them from right next to them. Also sometimes when you attack you get right up in front of them in a dark corner. I think that if you are infront of a person, even in pitch black, they would realize you were there. Feel free to add ideas and comments to what I proposed.
Kind of like some of these animations:
http://www.tesnexus.com/downloads/file.php?id=17125
http://www.youtube.com/watch?v=9jkIZsQ1h0Q&feature=related -- Kind of overdoing it.
http://www.youtube.com/watch?v=BQTtfFv0pP4&feature=related -- Again with the overdone.
http://www.youtube.com/watch?v=pPPXd0uw5Gs&NR=1 -- I like this one, but the arms move too much.
http://www.youtube.com/watch?v=E2hxXyV5DLk&feature=related -- Arms again.
http://www.youtube.com/watch?v=0og5HGQRnE0&feature=related -- Arms are relatively still, back goes way back.