Here is a screenshot of what I'm trying to accomplish.
By messing around rather blindly in Blender, I'm attempting to get this texture onto the mesh. But so far, I have no idea how to get it applied. This is really as far as I can get at the moment. Any help will be greatly appreciated.
http://img714.imageshack.us/i/94843900.jpg/
See, after selecting everything on the mask in Edit Mode, I selected "U" and told it to "unwrap", having that image appear in the UV Image editor window. In the UV/image editor window I went to image -> open -> the test texture that I pretty much just took from Google Images as I'm testing this out, I didn't want to work too hard on something. However, I don't know how to apply this to the mesh now.
I think it is generally a good idea to start from the beginning when learning a new program. I know you want your mask and you want it now, but in the end you will get stuck after every step you make and you will not really understand most of what you're doing. So maybe after a lot of forum posts here you will get a low quality mask in game at some point, but the next time you try to do something else you'll be stuck again. Invest a few days to learn how to use Blender, then try to make your mask. The final result will look much better and you will know how to use Blender for everything else you may want to do later as well.
I think the 'official' tutorial is http://en.wikibooks.org/wiki/Blender_3D:_Noob_to_Pro. There are also a lot of tutorials specifically for Oblivion on the Wiki, see http://cs.elderscrolls.com/constwiki/index.php/Category:Modeling_Tutorials.
Of course that doesn't mean you shouldn't ask for help here if you're stuck. But it's easier to help someone who is working through a tutorial and doesn't understand one part of that tutorial than it is to help someone who basically doesn't know anything about the program he tries to use and wants to learn it by doing. Which is not really recommended for a complex program like Blender.