Out of boredom, I decided to make this blog regarding the various mods I've been using for Oblivion. Note that these are only the ones I have, I may very well have overlooked some mods. Feel free to add them in the comments. I'll also be doing one for Skyrim once I'm done Oblivion.
So, in no particular order, here are my recommended mods:
1) Unofficial Patches (Main Game, Shivering Isles and Knights of the Nine)
The mod's tagline "Close shut the flaws of Oblivion" says it all. Every bug or glitch that hindered you or forced you to re-create a character are gone, like the Molag Bal bug that makes you loose every single attribute/racial bonus forever. I would recommend this mod above all others.
The Oblivion Script Extenders and Graphics Extenders are essential for installing most of these mods. As in, they won't function without them. Also, Wrye Bash or Nexus Mod Manager will make sorting and installing mods a breeze. BOSS will allow you to optimize the load orders automatically to allow them to run.
2) Qarl's Texture Pack
This 11-part Mod completely overhauls the game's graphics and textures into something truly beautiful. It might take a LLLOONNNGGG time to install, but it's worth every second.
3) Jarols NPC Equipment Mod
Tired of seeing enemies and NPCs running around in Glass or Daedric at high levels? Well, be annoyed no more! This mod changes the NPC equipment so you'll very, VERY rarely see them wearing anything above Steel or Leather. The occasional Bandit Ringleader or Marauder Warlord may be seen in Chainmail or Dwarven, but that's it, and even that is rare.
4) Oblivion Character Overhaul V2.0
A common complaint about Oblivion: everyone looks the same! Well, not with this mod, which is STILL in progress but is mostly finished. Every single race has been re-done so that they look almost identical to the Skyrim character models. Seriously, go look at the Nexus page for this mod. The faces are breathtaking.
Personally though I prefer to not use it, mainly because I prefer a more "traditional" Oblivion NPC experience.
5) MTC Expanded Villages
One thing I personally disliked about Oblivion was that every town seemed to be comprised of 3-4 houses only. This mod transforms every village, from Weye to Brindle Home to Pell's Gate, to 12 buildings minimum, complete with NPCs to fill them. There's even a new village added near Dragonclaw Rock called Rimehold.
6) Crowded Roads Advanced
Cyrodiil felt abandoned in the vanilla game, with only a few Bandits or Legionnaires roaming the country side. This mods adds over 250 NPCs to roam the highwways and byways. 10% of them run, 10% of them are on horseback, and the rest are walking. Also adds more Imperial Legion patrols along the roads.
7) Natural Environments
This mod makes the weather and flora of Cyrodiil much better: it adds seasonal weather patterns, adds birds and insects, greatly improves the trees and shrubs and much more.
8) Animated Window Lighting System and Chimneys
Ever notice how, even though it's nightime, no one seems to have any lights on in their houses? This mod fixes that and even adds smoke coming from various, radnomly changing houses to make each city/village feel more alive.
9) Better Cities
This mod drastically changes every city in the game to make them feel much more lifelike. More NPCs, more houses, and the ports of Anvil, Bravil, the Imperial City and Leyawiin now have over a dozen ships in each of their harbours, complete with new docksides areas with lots of new buildings outside the walls. All in all, it makes them feel much more like actual cities.
NOTE: I do not recommend the Open Cities mod. It makes the Knights of the Nine unstartable due to a bug with the Prophet in Anvil. Simply put, he will not spawn unless you de-activate the mod. It also causes some trouble with the Dark Brotherhood quest in Chorrol where you have to assassinate Motierre, then flee the city.
Tired of all those keys cluttering your inventory? This keychain hides them all until you need to use them.
11) Really AEVWD
This greatly increases the view/draw distance of the game.
Well, that's all the ones I can think of for the moments that I have (I'm at work right now and can't check) I may add a few more when I get home.