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Necessary patches/fixes/crash prevention stuff:
OBSE
https://www.nexusmods.com/oblivion/mods/37952/?
4gb patcher
https://www.nexusmods.com/oblivion/mods/45576/?
Unofficial patches (only get ones for DLC you have)
https://www.nexusmods.com/oblivion/mods/5296/?
https://www.nexusmods.com/oblivion/mods/10739/?
https://www.nexusmods.com/oblivion/mods/9969/?
Engine Bug Fixes:
https://www.nexusmods.com/oblivion/mods/47085/?
Floating Weapons Fix
https://www.nexusmods.com/oblivion/mods/46674
BOSS (Might not be needed but won't hurt either.)
https://boss-developers.github.io/
Better NPCs:
Blockhead
https://www.nexusmods.com/oblivion/mods/43752/?
Oblivion character overhaul
https://www.nexusmods.com/oblivion/mods/44676/?
Better Graphics:
Qarl's Texture Pack
https://www.nexusmods.com/oblivion/mods/45666
Improved trees and flora 2
https://www.nexusmods.com/oblivion/mods/8500/?
Weapon improvement project
https://www.nexusmods.com/oblivion/mods/43852
Grass Overhaul
https://www.nexusmods.com/oblivion/mods/42400/?
Bomret's Shivering Isles Textures
https://www.nexusmods.com/oblivion/mods/46162/?
All Natural
https://www.nexusmods.com/oblivion/mods/18305/?
Is nice:
Harvest Flora
https://www.nexusmods.com/oblivion/mods/2037/?
And I cannot un-reccomend OOO for a new player enough.
No.
Do not use it on your first Oblivion character. It's a great mod but it adds and changes so much, absolutely massive mod. You've played Skyrim, right? It's like combing Organized Bandits, Immersive Creatures, Complete Enemy Overhaul, and Morrowloot Ultimate.
Now, the leveling in vanilla Oblivion is really bad. As you get stronger it becomes more obvious the game expects you to min-max. I think everyone should try to play with it unchanged once but it might be hypocritical of me considering I will never play with it again.
OOO does fix this but it also does too much for a first game. There are smaller mods that try to fix it but I've never used them so I can't recommend one.
Much simpler than OOO.
Low level has chance to get powerful high level items.
Low level has chance of encountering high-ish level enemies.
Higher levelled enemies crop up occasionally based on dangerous location.
You encounter more low level enemies at high level mixed in.
No more bandits in daedric armour!!!
Higher level armour is really rare.
Good list but I'd replace OOO with MOO. I personally combine MOO with Frans and MMM.
As far as weapons I'd also recommend Immersive Weapons. But, if you go with OOO, Frans, etc make sure you also get the MOBS for it though.
I'd play it vanilla till you got tired of it and then start modding what you don't like or want to improve.
I got tired of vanilla oblivion mostly due to the way the level scaling works. It wasn't too bad for me at first. I didn't hate it nearly as much as many others, but overtime it grew tiring and the game became stale and uninteresting when everything is leveled.