Thats not really a good thing though is it ? I dont think the intention is for you to win through poor AI manipulation.. Alchemy I find superior to healing spells, but the way potions work is rather cheap since you can pause and glub as many as you like.
One thing I've found is if you play the game like an MMPORG it becomes a lot easier. It's actually quite similiar in so many respects (like as you level things become that much harder to kill). Using a bow to "pull" single creatures while stealthed for example is a tried and true EQ tactic. As is charming a creature then pulling another one before the charm breaks.
I did the next bit of the main quest and pretty much walked it. It's amazing what a difference a 19 damage weapon makes (w00t) . I still use the old 5 damage axe for one on one encounters with non spell throwers though, isnt fast , but it pays from both a player and a character perspective.
Anyone who really enjoys Oblivion that much and hasnt tried an MMPORG really should. They are so similiar, it's rather eerie. The only thing missing is not sitting down to "heal up". And waiting around for spawns to pop up.