1. The "old-school" RPG players, as you refer to them, were Arena/Daggerfall fans who picked on Morrowind before any Morrowind fans picked on Oblivion, and Arena and Daggerfall had fast-travel systems more akin to Oblivion's than Morrowind's.
Worth noting, actually, that Arena specifically
required that you use that fast travel system to get anywhere (I've tried walking from town to town, and after something like half an hour of walking in a straight line the whole world starts breaking down and glitching out, and you end up outside of some half-rendered walls that lead you back into the town you left from), and walking even many of the shorter town-to-town distances in Daggerfall took longer than walking across the entirety of Morrowind's map
the long way (meaning you were more or less required to use the fast travel system there as well, something that doesn't really apply in Oblivion where it's entirely practical to walk from A to B). Besides that, "old-school" RPGs in general used systems like fast travel a lot. Often with random encounters and things sprinkled in, but still similar systems.
2. Your anology is crap, in my opinion. For an example, I far prefer Oblivion's side quests than Morrowind's. They always seemed meatier and more diverse.
Probably because they are. Notice how in my massive post criticizing nearly every aspect of this series, I didn't once mention quest design. That's because that's something they've been significantly improving over time. Quests in Morrowind literally all consist of going somewhere, getting something, killing something, or some mixture of the three.
Not those with some elaboration that I've simplified. That's it. You go to a standard-looking cut-and-paste dungeon alone. You pick something up there. You bring it back. You go to another town. You go to a store. You get a thing. You bring it to someone. You go to another dungeon. You kill a guy. You... get the idea. Oblivion still had those, but it would mix things up a little. You'd be rushing into a place with a small army of NPCs at your side. You'd be going to assassinate someone in their bed, with bonus points if you can make it look like an accident. Yes, you're still doing those same basic quest archetypes, but they started putting little twists on them, little extra features that made them feel a little different. Nothing in Morrowind ever did that, with the exception of some (actually probably most) of the stuff in Bloodmoon.
But... eh, enough about that. The whole thing is kind of a ridiculous way of dividing things anyways. I grew up with stuff like Wizardry and Ultima and still love and play games like Realms of Arkania and Darklands, and I'd vastly prefer Oblivion over Morrowind. I like fast travel and don't mind the compass, even if I don't think bethesda's done a particularly good job implementing either. I still have no problem playing without either.
So tell me... where on that whole split do I land anyways? Am I not an old-school RPG player because I like being able to get where I want to be faster, despite actually being someone who plays old-school RPGs? Am I not a hack-and-slash junkie despite vastly preferring a more action-based combat system like Oblivion's over Morrowind's "you clearly hit but actually you didn't because the game said so" style of fighting?
EDIT:
I just had to come back here even though I promised my sanity I wouldn't just to say. A lot more people dislike Oblivion than people dislike Morrowind.
A lot more people dislike Oblivion than people dislike Morrowind
here. Specifically here. Definitely not in general.