Oh, great idea indeed, about joning the modders together

Anyway I'm afraid I can help you just with some ideas, and I also love to draw, if that helps somehow, I could give graphic ideas also

Although I think Oblivion is aready a great game, it .would be nice if it would have ...
- More fighting outside
I got pretty bored about the thing that all the dungeons and oblivion gates looks basically the same, I mean, no individuality, just copy paste, with a few modifications... So I tought what if more fights could be done outside those annoying places, like in the wild, Ok I know, there are bandits, wolves, ogres... but there are too fiew, Wouldn't be nicer going to fight into a deep forest... Maybe haunted by gosts?
- Better Ghosts
Speaking of ghosts, I like everything about ghosts, except the angry ghosts in oblivion, I got pretty disappointed about that... that's why:
- they aren't scary
- they aren't transparent enough
- they shoot project balls at you :shock:
- they are silly looking
- and so on...
I think the ghost soldiers that you happen to free, are way more scarry and ghostlike than the ghosts that attacks you.

- More scarry
I think Oblivion has a desperate need of scariness, and maybe better blood effect, like much of the other games have. It would be cool to have some scarry quests, I don't know about you, but when I played Clive Barker's Undying I was just amazed, of the scary atmosphere...
Also the Call Of Cthulhu had more scary atmosphere. Anyway, I believe you got my point.
- More weapon and armour variety
Some sets of new armour would be cool, the same goes for the weapons, I already beat the game, so far I got, what maybe 2 good armours, and 2 good swords... boh, they are not dropped like in diablo or something, I liked diablo alot, I tought in Oblivion was missed the point in gaining new exciting thing, wich will help you slay enemies better...
- More fantasy/environmental creatures
Oh yeah and about the water creatures, are there just the slaughterfish and the crabs or what? I thing in a fantasy land of such proportions, there should be more fantasy creatures, giant underwater serpents or monsters, or air dragons, from wich you must flee, and wait till they land somewhere to go and stealth kill them or something... Or serpent people that are silently hissing in the night, or maybe werewolves howling at the moon... If there ca nbe vampires, why not werewolves or other inbred human like creatures?
- Armour for horses & Atacking while on horse & Horse whistle
Since the first thing an enemy would attack when he sees you is your poor horse, it would be cool to add some armours to horses too, don't you think?
Also I got pretty bored because I couldn't attack while being on my horse, I think that is a big minus, the same goes for not being able to call or summon a horse when needed... a horse whistle would be able to fix it .... altough it's also a good thing to walk by food and building athletics, so maybe a whistle just for my "nearby" horse... (300m distance or something)

- Better rag-doll physics for humans and some creatures/Destructive environment
The physics in this game are outstanding, when it comes to objects, but when it comes to creatures (except for few creatures), persons I get a woody feeling, I don't know I think they are just not enough ragg-doll-ed. The rats are a good example of rag-doll model, I think It's design and construction is just outstanding... Also it would be marvelous if we could actually break something, sometimes.

- Better looking chicks/Better flirting system
And it would be cool to have some better looking chicks too

maybe to flirt with them a little more, like in Fable, speaking of wich if Oblivion world would merge with Fable and Undying, I think it would be nearly perfect
I mean about some features in fable, something like, Becoming good or bad throughout the time playing, sacrificing people, flirting, and so on, to be honest there are infinite things that could improve oblivion, although it's a great game already

Heheh, sometimes it's cool to dream,
... comments are welcome:)
Edit : I know some ideas were already been given here or there , some mods were already been done, but these are the things I missed in the game ...
PS: The fly spell/potion idea, it crossed my mind several times while playing, I think would be really cool as someone has suggested above.