Oblivion, quite frankly, is an extremely underwhelming game. Nothing about it speaks of creativity or care. Throughout the next few paragraphs, I'll outline the reasons why Oblivion is a sub-par game.
To begin with, you're cast off in what is supposed to be an open-ended world, but in all actuality, it is as closed and narrow as can be. Your input in the game is minimal at best. You see, your character isn't going to be what you want him to be, but is actually an extension of the environment. Every action you do will be as a result of the environment calling for it. For instance, there's a quest in the game where you have to determine the identity of an Orkish knight, but the game forces you along an extremely narrow path that condemns your character to being the way it wants you to be. And this can be expanded to basically every other quest in the game. So in essence, your character can be all that you want it to be until the game wants you to do be something else. This is further aggregated by the fact that there's basically no real dialogue in the game. Your character is unable to express himself past using certain keywords, like 'rumours' or 'gray fox' to garner information and "hopefully," more keywords to use on other NPCs. As for the NPC dialogue, it is constantly recycled among all the other NPCs. Typically, NPCs will only say things that relate to a quest and rarely, if ever, will they say anything else. Which is another problem of the game since the NPCs do not really react to changes in the world. This is especially noticeable once you rise up to extreme prominence in a guild, like the Mages' Guild. You see, I became the Arch-Mage and practically no one acknowledged it save for fodder NPCs in the Arcane University. For all that the country of Cyrodil could care, I could be a beggar!
The RAI system fares no better than the rest of the game. As you all know, the RAI is supposed to bring life to the characters of the game, but it doesn't do that at all. In fact, it simply makes them commit some of the most unrealistic actions I've ever seen in a game before. For instance, I came upon a Breton greeting an Orc, whom promptly said, "Leave me alone, Breton scum!" Even so, the Breton asked, "What's news in the rest of Tamriel," to which the Orc replied cheerily. This is an all too often occurence in the game. And the foolishness of the RAI isn't limited simply to dialogue, but to combat, where mages will charge right up to you and begin attacking you with a dagger, despite having ample magicka to fight you with. This is all compounded by the fact that the NPCs adhere to such stringent protocols in their life that they will basically never do anything other then go to a tavern, talk to an NPC, or sleep in the same place as always. Suffice to say, the NPCs are as lifeless and dull as ever.
Oblivion isn't an RPG, it is an action-adventure and a poor one at that. Its sole focus is providing a ton of content that has no substance to it, much like an MMO, so if you like that sort of thing, then you'll love Oblivion. If not, RUN LIKE HELL! Oblivion receives a 2 out of 5 from me.
ps; Oblivion's implementation of combat is average at best. If you've ever played a game before, you've most likely played one with a better combat system.