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http://www.uesp.net/wiki/Oblivion:Efficient_Leveling
There's no real need to level up if you don't want to. You can easily complete the main quest on at just level 2. So you only need to level up as high you want to.
Overhaul mods such as OOO or FCOM have better leveling. OOO is much harder than the base game. I am sure there are others on the Nexus.