I had a few thoughts on how character creation could work. Oblivions attempt with actually playing out a bit at first was nice but when making new characters it quickly became annoying that you always had to go through the tutorial course. A way to solve this could have been simply going through the door the emperor went through skipping the entire beginning, but I want to focus on a different method that actually allows several different openings.
Dream sequence:
The entire character creation itself could be played out in the form of a dream sequence. This would also explain how you can change your race, six, face and several other details suddenly.
This dream sequence could start out in a small room or a hallway, all looking relatively surreal. In this room you have a bed (resting in it makes you exit character creation) a journal (where you can write details about your character) a mirror (editing your characters looks and race) and doors leading to “dreams” (scenarios where you can give your char a test run).
It should be possible to save in the dream sequence, that way you can go through various different characters without the risk of losing a edit you made before which happened often enough in Oblivions FaceGen.
Mirror:
When you click the mirror you see yourself, but since you're in a dream you can freely change your appearance, race, six and small details about you. You can access it any time and remodel your character.
Journal:
Here you can describe your character, the your name, age possibly, define your past and directly modify your skills, attributes and traits.
-Name:
There should be more details possible about your name, instead of just writing one name it should be possible to define:
-Name
-Family name
-Middle name
-Nickname/Call name
-Title
People will use the ones they see as appropriate, officials will likely use your family name, close friends possibly your name or nickname. If you made made yourself known they may also use the title you assigned yourself, though the title can also be something that is added during the game.
You don't have to fill in all names, only filling in one field would actually be required, after all you could chose to be a nameless street dweller.
Also a function to change your name officially in game would be nice, like paying a notary to officially change your name, this could even be a way to get out of some crimes.
-Age:
Another optional field, you can define how old you are or at least think you are, but it can also be left empty.
-”Class”:
This should be an optional field too, this however is just naming your class, you can leave it open though.
-Write your past:
This is a field I think is a very role play friendly way to make your character. In your journal you have a page where you can actually write your past, not actually type it down but you can chose things that happened in your past from a dropdown list.
Those then modify your skills, attributes and some character traits depending on what you chose. You can however also do it the classic way and simply chose your preferred skills and attributes and character traits.
-Playable past:
A friend got me onto this idea, instead of just clicking your past you could actually PLAY your past in a way. When you chose something in your past it uses a “default” for that like “I got into a fight with a gang when I was young”, it will use a default that you have been in a fight with several people.
However you can also chose to play the event out in your mind, doing so will create a doorway to a “dream” where you can then play this event, maybe you chose different, you fled from the fight, you managed to negotiate your way out of it, maybe you got beaten half to death, maybe you accidentally killed someone in the fight. All this will alter your character in some way, you got friends with people (your conversation skills increase), you ran away (you got more experienced in hiding and avoiding), you killed someone (you spent a prison sentence or got slightly traumatized from it)... There's tons of slight variables in there that can all change your character.
It would require to create a lot of small dreamscapes with various choices but just think of how much it allows you to actually get into your character more.
Again doing this would be purely optional, when you just want to make a quick character skip this and just chose your skills and attributes.
Dreams:
There could be a variety of “dreams” you can visit to test out your character, different than the dreams that define your past those don't alter your character, they are more or less a “test run” to see how your character plays out and where you'd want to alter it. Similarly to Oblivion though a dream could give you a “suggestion” how to change your character to make him more likely to play that dream successfully.
You can't really “die” in a dream, dieing simply sends you back to the starting chamber and gives you suggestions what you could do differently. Also you don't level up in dreams and obviously you can't take equipment with you from them.
The Bed:
This is where the actual game starts. When you feel your character is done you can chose to rest in the bed, doing so will cause you to wake up in the “real” world and the actual game to start.
If you haven' used the mirror and the journal till that point to define your race, six, looks, name and attributes/skills/traits it could either remind you that you need to do that or automatically open them allowing you a quick character creation by just letting you do those steps, ask you if you're happy with those choices and then either lets you revisit them or wake you up.
Different start outs:
Another thing the chosen past can do is alter how your game starts out. For example if one of your final choices was that you where arrested it's possible that the game starts you out in chains and you just get released into a new country (deported) similarly to how Morrowind started. If you had been arrested multiple times and it starts you out it could actually start the game by putting you in prison to sit out the remainder of your sentence (where you could possibly bribe a guard to let you go early, forcing you to steal to gain money from the get go and continue being a thief).
Similarly saying you always held on to an old family heirloom could start you out with this still in possession, maybe a valuable necklace or ring. This can do two things, one being in possession of it raises your luck a bit because you feel a tie to it, or you could sell it to gain some starting money but leave your character possibly feeling guilty and lowering your luck.
If you didn't choose a past the game would simply use a default starting setup.
PS: I don't think actually being able to write your past would destroy the old “Stranger with a mysterious past” way TES usually begins with (though this is bunk since Daggerfall started you out as a old friend of the Emperor). After all almost everyone made up a past for their character in their heads, this way it would at least be possible to actually tie this into the game.