It's been over seven years and this topic has been beaten to death so very hard. I have no illusions that my thoughts or perspective on this are going to have any effect on anyone, or that what I am saying has not been said probably a million times. I guess I'm just venting.
The level-scaling in Oblivion really gets my goat, and I want to blow steam about it. Here goes.
1. Quest Companions can't handle it.
When I started the Path Of Dawn at level 20, I cringed because I knew Baurus was going to get wrecked (thankfull I was wrong because the Mythic Dawn doesn't scale). We got to the sewers and found Goblin Warlords. Thank Talos for essential Baurus because he probably got knocked out atleast three times. This effect is repeated so many times throughout the game. You have such a better chance of your companions surviving at level 6-8. The Bruma Great Gate, Farwil Indarys and the Knights of Thorn, et cetera. They do not scale up WITH you. I think the only non-essential quest companion that gets better with you is Mazoga The Orc and I had to save her behind too even with the Daedric.
2. Non-Combat Major Skills break the game.
The effect leveling up has on the Oblivion World is little more than making everything around you STRONGER and more FEARSOME. It ties in entirely to combat. Thats all well and good, except leveling up is not always the result of a stronger character. I recently made the mistake of having FOUR different non-combat Major skills. I'm at level 30 and everything around me is kicking my butt. Atleast they were until I nabbed the Escutcheon of Chorrol and 2 other 33% reflect damage. That, on top of a Mundane Ring and some Sigil Stones my character became invincible. Problem solved. But not really the point, levelling up is not a direct result of combat efficiency but levelling up requires your character to be more combat efficient. You see the issue?
3. Level Scaling is not area specific
You level up to 22 and then everyone and their MOMS has some armament. The Goblin Warlords, the Marauders branding top tier weapons. (I honestly always thought this was lore friendly. 59 Oblivion Gates with Valkynaz's in them. Im sure Daedric items were all over the place at this point.) There is no area in the entire game that your character is too high level for. It just seems unreasonable.
Well, that was 3 bits. But I think I got it out of my system. Play on!