McDon: Essentially your system is to punish players who like to do quests randomly from the different questlines. Pretty much, "You want to join Mage's guild now? Prepare for twice as much Oblivion gates during Mage's guild quests until you complete the main storyline!".
Just my take on your idea...
It's pretty much how it would look like in "real life". I'm not saying the world should over and so would the game, but to show some progress. That even without player's commitement, the world lives.
The world revolves around the player in this game, and it's not always good. It breaks the suspension of disbelief when EVERY quest begins with "are you ready to save my daughter now? Because if you're not, I will wait here for eternity".
I don't like that much. When the quest starts, there are some nice things prepared. But everything around it look so artificial.
Which stands in a strong contrast to what they tried to achieve. They created a semi-breathing world. People go to their work, go to their houses to sleep, they have their own things. You have an image of a world that lives.
But then you are reminded the world stands still every time you pick a quest. What's even more funny, in some quests when you start asking for details, you don't even have an dialogue option to say "fuck you, i'm going home". When you asked about the quest, it's already in your questbook. Kinda lame for me. There were at least few instances in the game, where my charactyer would reply "I will do that. For a price", but the only dialogue option avaible were "Sure, I'll gladly help you!" and "No". Sometimes there wasn't even a no option! (sic!)
And yes, the player should be sometimes punished for his actions. This make the world the player lives in a more realistic one. Actions (or lack of them) and consequences. Pretty life-like.
Again, Oblivion feels like a big hub with self-contained quests, not like a living world of an RPG game.
Play at least one tabletop RPG in your life. You'll know why Oblivion sucks in comparison. And you'll maybe apprecieate cRPGs that try to immitate this experience more.
Oblivion is not like a RPG game, it's more like The Sims: Fantasy Although in some ways, The sims games are sorta role-playing games :P But you know what im saying - it's "do whatever you want, there won't be any consequences whatsoever" kind of roleplaying.