With the TES series we have seen a shift going from more traditional "rpg-style" combat to a more action-oriented system. However it's been a bit of a rough road. With Morrowind the combat felt disconnected. you'd be visually right up on someone whacking at their head but getting a "miss." This took the player a step back, as it took you out of a game because you, the player, were in control of the game but the game was still trying to determine something that you visually/physical controlled also.
With Oblivion this was taken a step further, even more action oriented with no "to miss" rolls, you hit something you hit it this time. However the combat still wasn't comparable to the great action games out there. It came off feeling "wishy washy." There was no real connection between you and the enemy you were fighting, you would run up to them, swing your sword hap-hazardly hacking away at someone., there was no real "dance" to the combat. Nothing like you'd picture if you read about a real sword fight or watched it on teh big screen.
The main things that are holding the combat back is the fact that the game uses first person. This is a big limiter to the combat because of the fact that as a developer, you don't want to constantly "disorient" the player, this leads to the movees and combat being kept down, there's no fancy acrobatic moves, no real lv changes in fights or anything. It just doesn't feel that "personal/impactful." Not to mention with first person views in games it drastically cuts off your peripheral vision, So things you might see/know if real life you simply don't because of the FOV/limitations of your monitor.
The second main reason the combat wasn't as good as it could be was the combat system itself. Like a good famous third person action game, Jedi Knight (which I'm sure many of you are familiar with) it had one fatal flaw in its system, movement. In both Obliviion and Jedi Knight the movement and direction of your combat moves were based on a direction. This ends up creating both visually and physically combat that looks rather.....awkward. You have two peple fighting who simply run around without meaning, whacking away at one another. It looks basically like two kids fighting with nerf swords, not like either a real sword fight or even a more "Hollywood" choreographed fight.
The biggest change to combat to make, to get it away from feeling this way is simple, do not base the direction/combat moves on a physical direction. Instead of using direction/movement to determine what moves the player does all you need is to make one fundamental change. Best of all? It can be done with NO key changes, that's right, no additional keys/button to use apart from the already implemented controls.
There was one game that did this, and to this day it has imo the best Melee combat system to date, Severance (blade of darkness). In Severance the combat was fun and enjoyable. It placed a GREAT importance on being defensive (dodging, blocking, etc) and know when to attack and not.
The controls worked much like Jedi Knight except for one major difference, instead of simply hitting w/s/a/d and THEN using your mouse it reversed it. It was a simple yet wholeheartedly world of difference. The left mouse button become your "action" button. You simply pressed it (and held it down) and then used w/s/a/d to pulle doff moves. Then you simply released the mouse button to use w/s/a/d to move around as usual. It was quick, easy to learn, but offered a great depth that JEdi Knight and similar games couldn't match. This made combat both physically play out and visually look "right." Not only did it make combat more cohesive and enjoyable but it made things feel more connected. Gone were they awkward spactic moving around and frantically whacking away look of combat and now you had combat that looked like you would expect it to look in real life. . You moved when YOU wanted to, not to pull of "x/y/z" move.
The next major improvement to combat was the Lock On system, now do not jump to conclusionis here. When I say "lock on" most people here probably imagine a cheap "aim-assist/win" button. This was not true of severance at all. The lock on system was oe of the best things because with the lock on system it made the importance of the defense even more so and also made it a pillar of combat, rather then an afterthought. It didn't feel cheap and it wasn't a "free hit" either.
With the l ock on system when you locked on to your chosen foe (which you could easily switch/get out of) it merely kept you oriented toward them. This opened up a major change in movement, the circle strafing. Now for any of you who have watched fights in real life, boxing, MMA, etc you know that circling around your opponent is a very important part of combat. This was the case back in the middle ages as well. Without a lock on system you do NOT have a circle strafe, as movement still exists on a 2d-plane for mouse/keyboards. You would have to move /turn your mouse constantly to "mimic" a circle strafe in most games without a lock on system. However once you lock on to someone in Severance, your a/d key becomes a circle strafe. What this does is allow you to move around your enemy, to get a good angle for a hit, etc. You press it quickly twice for a dodge as well to move out of the way of blows.
See with the Lock on systesm another key thing that they did was to have animations/hits play out once you start them in that direction. This means that if you are facing me, then go to attack (while locked on), if I am quick enough to judge right, I can dodge your attack because once you start your combat move, it plays out in that direction you were facing, this allowed you to dodge attacks quickly if you read your opponents moves. So lock on wasn't cheap, didn't magically help you "hit" someone, it merely connected the combat and made it both play and feel more realistic.
I have found a few youtube videos to show the combat system in work from Severance. The combat was very visceral, bloody (Location based dismemberment, etc). Please consider this game is a bit old (2001, but it was one of the first games to use real time lighting/shadows)), movement is a bit stuff but the combat is hands down the best implementation of melee combat in a game.
http://www.youtube.com/watch?v=hi6luPpXzGU
Better yet you can try the demo and see how how you like it yourself,
http://games.softpedia.com/get/Games-Demo/Severance-Blade-of-Darkness.shtml
I've went on a bit of a long winded post here and should probably stop there. These are just my ideas on a better combat system then what most games use as far as melee combat games. I'm not saying axe the first person view, just saying a good mix of a well designed third person oriented melee system would work better then most first person systems, at least from all the games I've played with melee combat. You might evne be able to take the Severance combat and make it work in first person for all I know, but some of the moves with the spinning, etc would take time. When it comes down to it, I just prefer third person and well thought out melee combat along with first=person well done ranged combat (IE bows/crossbows, like in Mount and Blade). That would be the best of both worlds.