Hi
I was wondering which graphic settings would be recommended for my computer

AMD Phenom II X4 Quad Core Processors - 2.6Ghz
3 GB Usable Ram
ATI 5570 1GB
Windows 7 32bit

My monitors native resolution is 1920x1080
Am I missing out on any info. Oh, and yes, the game runs on my computer

I can't speak to Win7l but a good quadcore with a fine video card should be able to run pretty high graphics in the vanilla game. Logically, try it out, and you can always change it if that doesn't do well. I'd also suggest starting at a lower resolution, such as 1024 x 768.

I don't think that card will have any trouble running high level at full resolution. Just don't bother with "self shadows," as it's a broken feature.

What about anti-aliasing?

I've currently got the game with high settings on. I tried 1680x1050 and the game looks and is running great! Would there be a significant difference if I was to put the resolutution to 1920x1080?

If 1920x1080 is your monitor's native resolution, then it will indeed look better. If I try to turn my games down to anything below that the image is always a little soft and fuzzy. http://en.wikipedia.org/wiki/Native_resolution

Just tweak your settings until you find a nice balance with a decent fps that you enjoy playing on...

Yeah, no one can really help you wihout seeing the performance you are getting. Just tweak the settings till you have a nice steady FPS. Trial and error. Not that hard to do.

Does this hold true even for equal aspect ratio resolutions? i.e. 1920x1080 => 1280x720, both being 16:9 aspect ratio.

Yes, it holds true for all resolutions which are not the monitor's native resolution. It's because the actual dot-matrix from which the pixels are created are of a fixed size, and the "scan-lines" are thus fixed, unlike in an old CRT multiscan monitor, which can produce variable numbers of scan-lines. You can get a decent image with a 4:3 resolution on a 16:9 monitor, as in a 1440x1080 resolution, with the black bars on the sides.

I found 1280 x 800 to be the best, even though I have a newer 1080P monitor. I have an AMD HD 6870 and set AA and Anisotropic to 4x. Even with various texture mods, the game runs smoothly.

Other than that, read http://www.tweakguides.com/Oblivion_9.html for ini settings.

A lot of the modern monitors will interpolate if you set a lower-than-native resolution, so it won't look significantly worse, but you're trading processing in the GPU against processing in the monitor to get up to the native pixel count. I'd expect the GPU to be better at it, so max performance should be running at native resolution. However, the most likely cause of slow-down is going to be overloading the single CPU core used to process actor animations, rather than anything on the display end. You can slow down the graphics by loading too much into VRAM with silly sizes of texture maps - most of the supposedly high-res ones are just upsampled versions of the standard ones and do nothing but slow you down.