More like Morrowind. Of course Oblivion has its own peaks (stealth, physics, npcs) that should be kept and improved, but for me Morrowind was better in most important aspects for an rpg (story, depth, dialogue, choices, progression, rewards, customization).
I've played every Elder Scrolls game including the spinoffs (I wish I hadn't >.>) and I personally like Daggerfall and Oblivion the most, equally because I can't really pick which I like more, though I did like Morrowind except the combat felt tedious and I actually only played it one time through completely because of said combat. As for the reasons you stated above saying what Morrowind had that Oblivion didn't, for story, yes Morrowind had a more in depth story for the main quest but for the game as a whole including side quests, Oblivion had more immersive story as a whole, Morrowind had a REALLY good main story but the rest of the world seemed less then alive. Depth was covered by my last sentence and as for dialogue, I'm not sure how the Morrowind fan boys get this one, there may have been like 16 different options to talk to someone over on each NPC but 15 of those 16 were always the same crap you have read before. I was always annoyed by the huge list of topics and all of them were the same mostly useless info. In Oblivion, you would come across the same dialogue every once and awhile but you would have gone through several conversations before you got around to the same dialogue and even then it changed from region to region. Choices, basically the same with Oblivion though Morrowind had a few more instances that you could make a choice such as more skills.
As for progression, I'm not sure how you would even go about counting that. In Morrowind it depends on which area you travel to whether your too high level or too low level. Now I give that Morrowind has this part perfect. One of two of Oblivions flaws is the creature leveling. As for rewards, I personally think they are on the same pace. Morrowind actually had some overpowered rewards which I think takes away from the experience of the game but others are happy with one shotting every mob in the game, it's your play style. As for customization, Oblivion punted Morrowind. The customization of your character is far greater than Morrowind due to the in depth customization of your character. If your counting mods for Morrowind that's not even fair due to the fact that Morrowind has been in the spotlight for mods longer than Oblivion and a lot of modders worship Morrowind because it was their first experience in such a large 3d world and they get emotionally tied to the game and think it is the best when a better version comes around. I know you guys love Morrowind and I liked it too but you can't be biased and shoot down the other games picking at them for it's few flaws because your are emotionally invested in the first game you played of the series. I'm unbiased when it comes to games, I look at them for the value of play and Oblivion takes the cake of the series, well it and Daggerfall. If I got attached to the first game of a series I would say Arena was the best and that all others of the series were crap but I don't because I love The Elder Scrolls series and don't hold my allegiance to any one game.
In short, Oblivion had just as much depth of story as Morrowind if not more in the overall game. I mean did Morrowind let you bring the apocalypse to a Kajiit town by raining down flaming dogs or turn an entire village against one another and murder each other? Skyrim won't be another Morrowind or Oblivion, none of the ES games have ever been like the other and they still won't. This is the fact that makes ES great and Bethesda a world class game studio.