Ooh, ooh! Me happy with this
new interview! Tee hee!
Here are some info and some quotes from the interview:
--NPC's in combat can use normal attacks or use power attacks based on their stats.
--NPCs in combat can dynamically switch between melee weapons, bows and magic based on their skills, as well as use the information of their surroundings to determine their actions (ex: get better weapon or running away)
--In terms of stealing, stealing is still a crime, but this time there are minor penalties for the minor crimes.
--Some less-than-upstanding-citizen-NPCs will not really care if you steal stuff.
--Lockpicking will be a minigame of some sort.
--No "magic mode"=magic wielding whenever you want.
--"All weapon types have their own stealth attack".
--Ending is 'BIG'.
--Infamous and famous system will have effects on what different quests/solutions/paths you can get.
--No NPCs will directly steal from you. Your house is also a safe haven, so supposedly
no NPCs will infiltrate it.
--Equipping clothes/armor will be the same in Morrowind, except rings and amulets will now be visible on your character.
--"Shopkeepers will still not accept stolen goods. Luckily for compulsive stealers, the Thieves Guild has fences who have no such scruples."
--In terms of factions, "there will be ongoing rewards and some gameplay for those who advance to the head of a faction." All factions will have individual storylines, sort of like subquests.
--In this game, the landscape is BIG, supposedly bigger than Morrowind. Also, the day/night cycle is 48 minutes, same as Morrowind.
--In terms of damage of stuff--"The damage won’t be visual, but it has a damage rating. The more damaged it is, the less protection it provides. If it hits zero, the armor or weapon breaks and becomes unusable. NPCs will drop their broken weapons and shields. It’s pretty cool to fight an NPC and see him toss away his broken shield."
--Stealth skills and armor-"Yes, your armor factors into your stealth rating. Unless you’re at the absolute pinnacle of thieving skills, wearing heavy, clunky armor is going to alert people to your presence very quickly."
--Not all of the '200 hand-crafted, trap-laden'dungeons are are tied to quests. A lot of them you can just stumble across. "The percentage involved in quests is higher than what it was in Morrowind, however."
--This game will not involve the typical "run-behind-me-and-attack-guys" mercenaries. There will be interesting ways that they will be used within the context of quests.
--Oblivion will be on DVD for Xbox 360. PC--unknown for the moment. Most likely will be on DVD for PC as well.
--Construction Set has been improved alot! "We’ve talked previously about our procedural content generation tools to create landscape and environments very quickly. The quest and dialog system is completely new, and much better organized than it was in Morrowind. The physics properties of objects are set in the art file, but we do have manipulation tools in the editor so you can stack or lean objects with physics active – so you’ll know exactly how they’ll act in the game. The program lip-synchs new files automatically."
--21 skills in total, and there are 7 skills in each major category (stealth, combat, magic). Long Blade and short blade are now one skill.
--Every category will have perks, such as special ablities or bonuses as you advance in skill.
--And (magic users be happy!), some useless spells have been taken out, and now some new ones have been added.
Oooh, ooh! *swoons*
***--New effect called 'Reanimate', which allows you to resurrect a dead NPC and he/she can follow you. Playable necromancer class, anyone? (Hopefully?!)

to the devs/Gavin for this interview (especially for that last tidbit!)!
I may be missing some stuff, so correct me if I messed something up.
EDIT: Oh! Is the Nine Divines still a joinable faction for the PC? I really hope it is. They didn't take that out, did they?

I know it's just rumours, but I haven't seen the interviews mention the 9 Divines in awhile now...
EDIT2: Ay Dios mio! What is up with me and the double negatives? *slaps forehead*