There's a trick, I think, to getting the most out of a hardcore simulation game. I think you have to lose yourself in your character, to stop thinking of things like eating food or finding water or pitching and breaking camp as game mechanics and to start thinking of them as the rhythms of everyday life. If you can't make this mental shift, you run the risk of finding the game tedious and frustrating.
I think I'm finally getting to that state of mind with Oblivion, but it took me awhile, probably because I'm not completely sold on Oscuro's Oblivion Overhaul. On the one hand, it does what it promised - it changes the game into something requiring greater caution and planning, where you can't just strut into a random dungeon, but rather have to approach it with respect - as if it were some dangerous treasure-filled, monster-guarded cavern.
On the other hand, it's four hours in, and I'm still only level 1 (however, I am certain that the leveling system is working, because unlike the save file I had to abandon, the level-up progress bar is showing movement). Maybe I'm just being needlessly perverse, but while I'm all for realism, I also like to see progress. Gaining levels is my favorite part of any rpg, so it always bugs me when a game is stingy with them.
Part of the issue I'm having is the way that the modified game encourages you to avoid confrontation and danger, and thus the activities that would get you the experience necessary to level. (Put it this way, at one point, I was killed by an imp. which is a genuinely new experience for me).
It makes me think about level-scaling in general. It seems like a knife-edge to walk. Oblivion's default level-scaling is rightly criticized for the way it can punish a player for leveling up. Yet a fixed, non-scaling world, like Oscuro's has its own share of problems. An open-world rpg is inherently non-linear. There's no guarantee that any given location will be visited by a character of the appropriate level, so large swaths of the game may be too easy or (as has been my experience thus far) too difficult. It's a non-trivial challenge, so I won't say anything negative about either approach, except this - I really don't enjoy the "zero" portion of a "zero-to-hero" story, and I hope things change soon. (Yet, even so, I would take the steeper difficulty curve of Oscuro's Oblivion over the whiff-a-thon that is Morrowind's early game. I may be dying constantly, but at least I'm dying while getting in a few hits of my own).
The compromise I've come up with is to avoid danger, but attempt to level-up by doing various non-combat missions, such as the thieves guild quest-line. It's working out fairly well, so far, but I'm afraid the far-flung nature of the quests may pose something of a problem. It is a peculiarity of my own personal preferences, but unlike other "hardcore" aficionados, I have no issue with fast-travel in the Elder Scrolls games. Yet, it seems like every other mod does something to undermine it. My map marker mod suggests putting a limit on the maximum distance of fast travel (which I agreed to on the assumption that the limit was more generous than it actually was) and Oscuro's removes the starting fast-travel option from the various cities of Cyrodil. So, at least for now, I have to hoof it from the Imperial City to Bruma (where the first-rank guild fence is located).
That's not such a big deal for the first trip, but since I anticipate traveling back and forth quite a bit, it looks like I will have to fiddle with my mod settings some more. I'll confess, I kind of dread doing this. I think my mods might already have introduced some new bugs to the game - when joining the thieves' guild, Methendhel simply would not show up on time for the quest to begin, and I wound up having to use the console to spawn her. Running them with non-default settings may just add too much chaos to the system (on the other hand, it is also entirely possible that the thieves' guild thing was just a regular bug and had nothing to do with my mods, because this is the Elder Scrolls series after all).
My tentative verdict for modded Oblivion thus far - aggravating, but probably worth the effort.