Performance talk:
Even if your average FPS is ok and indoor/dungeon is more than ok, there's all these very bad 'hot spots' where it dips like mad. Dickering with all those little in-game settings doesn't do much of anything for me - hot spots are still hot spots. The only thing I found to consistently increase FPS to acceptable (18-20 or better) in those hot spots, while still having view/fade stuff all on high, was giving up and turning the image quality setting in the vid-card menu to 'performance' instead of my usual desired max 'high quality'.
The other thing I found, dunno if someone posted this, is altering the grass via the ini file so it spaces them less densely, or changes their clump size, or something. That helped me quite a bit overall when you're outside and like grass on. In the Oblivion.ini in your "My Games" folder find 'iMinGrassSize'. It''s set by default to 80. Change it to 110 or 130, I put it 110, 130 looks too scattered.