So it took a year and a half to get Oblivion playable again. The release of Streamline 3.0 beta made it possible.
After creating a new character with A New Beginning, the first time I explored a ruin (the fort just south of Anvil), I realized that I had no torch but I was there, so I kept going and hoped I would find a couple of torches inside. I did eventually… but only after I had to experience a few pitch black room and fights in the dark with a couple of outlaws.
It was creepy not being able to see if there was a trap ahead or someone around the corner.
Edit: Performance issues and mod conflicts reared their ugly faces again. Back to troubleshooting…