You know what would be nice? If the game got scaled down so that you have to play more carefully. It should be vastly more difficult, say, 3 strikes from a blade could kill you. And not only that should be scaled down, every creature and npc should be able to kill and be killed so easily. It would make you think more about trying to fight someone and you won't get hit 30 times without dying.

Uhm, that sounds like FCOM with the extra damage options turned on, combined with moving the difficulty sliders.

Deadly Reflex. This mod has the secondary feature of forcing you to time your blocks ( your blocks are ineffective if you hold it for more than 2 seconds or so) and doubling the damage. however, the main feature of this mod makes it to me, the best mod in elder scrolls history. Cutting people in half, Decapitation, Stealthy throat slits, Skull-head explosions, and horse combat along with horse combat decapitation make this mod amazing.

You might want to try my personal combat tweaks. It doesn't quite stick you at 3 hits till death, but ups things up high enough to where you have to be more careful of how you fight. And best of all, it doesn't require any other changes, and can actually be added onto many other mods, even those that change aspects of combat (as long as it is loaded last).
http://www.tesnexus.com/downloads/file.php?id=14087

There are some mods out there to make oblivion the way you like, there was this art of fighting mod, didnt try it but its description was something that might suit you... Also there was something like one hit kill or something...

Or try wearing no armor and play a stealthy character I have a 32 Assassin with Hashashin armor on me, no armor boosting enhancements on them, I have 2 important mods thou, deadlier sneaking 1.1 and arrow speed and damage fix, that way I can kill many creatures and people with one shot (you should see mannimarco poor lad) but when they see me things change, one ogre can kill me after 3 or 4 blows or one xivilai can kill me...