Newbiezilla asked me to post this here...
I personally go with Nautical points.
Take this thread as a "What should Oblivion have been" or "What can TES V be." The outcome is probably the exact same anyway

Anyway, we can assess numbers of people who are in favour of the compass with this thread. We can find out what people want done with it, or wish was done with it.
I'll deal with my attitudes to each of the poll options - I don't require anyone else to do this, so don't feel obligated.
I liked it. it should stayI disagree with this one, as I felt it was added to fit into a larger audience, so people would have the incentive to play on if they weren't hardcore gamers.
People who had friends with this game would play it for maybe half an hour, and if they knew what they were doing, and not getting frustrated like they might have done if they were playing Morrowind in same friends house, and decided against buying it.
I personally played Morrowind over in a friends house before buying the game, and I bought it for exactly the opposite reason - I felt I could explore anywhere and have fun.
I hated it, it should goI'd like the game without the compass for sure. Though I know they felt that it was obligatory because the fact that NPCs went on their schedules.
To me, it was unrealistic having the ability to have a compass detect people like that. I say no to compass detecting people, anyway, personally. Locations I can deal with, not people.
Nautical pointsYou have a map, in game and in real life, so I felt that Nautical points compass would be ok as a just when you get directions to have an on screen representation to confirm you are going the right way.
Limited range This could work quite well, for instance at Cheydinhal you will not see something at Anvil being pointed out to you... I think a set paramater could work quite well here.
SlidersMy problem with sliders is I feel we shouldn't have to adjust sliders to accomodate us. I don't like messing with the difficulty slider, as I should feel i'm going into a world, not tweaking the world. Though i'm open to counter points on that.
A slider for on or off, thats fine, i'd end up switching it off assuming nautical wasn't an option.
SummaryI guess you could say i'm mixed in my opinions. I guess you could say at the moment i'd go with Nautical (or compass points)