I've poured countless hours (I counted, it's in the 60's) into Oblivion on the ps3. Lvling npc's are easily mistaken as the broken mechanic. It's in fact, just the middle result. The end result creating a frustratingly impossable game. Here's the problem;
It's so easy to lvl up in Oblivion, that you can outpace yourself in power. When you make your character, you naturally invest in skills you want to be good at. However, those skills are what earn you level ups. Fight with swords, get beat on in your armor, mix potions, pick locks, etc etc; if you invested in them because you intended to use them to effect, you'll level extreemly fast just roaming.
As your threat rises, the challenge and equipment of foes then do too. However, you can't keep pace with your initial character, and the threat of the surroundings. The only sound alternitive (aside from tweeking with the difficulty bar) is to use skills you did NOT invest in to gain in power without leveling up.
So, at lvl 10, your character has equipment of a lvl 5'ish character (with an exception or two). The enemies are all twice your better, forcing you to lean heavily on those skills that are secretly killing you. You lvl faster, the enemies get stronger, and suddenly each fight is a battle for your life. Your attention is drawn to the leveling monsters and NPC's, and forgets about the underlying problem.
I remade a new character in Oblivion. She invested in skills that are HARD to level up. The adventuring skills like Jumping and running. Heavy armor AND light. Only one would be used with any frequency. Etc etc, you get the idea. I was then allowed to train up the swords/weapons skills, and alchemy, and other skills I wanted to use with regularity because I found them fun. It was a slow process at first. Daunting not being that good at some things. But as the game progressed, I found myself challenged, and able to meet the challenge.
The mechanic is flawed. It's not a perfect game. But because of how you grow in power, different players experiance the game differently.
