The only problem I may have is it might be too hard to make your own stuff in the TES Editor. I'm sure you might be able to apply some of the texture shaders from the game, but if your going to make your own items you might have to have Rhedd-like graphical creation skill to make something that doesn't look like crap compared to everything else.
Mybe Studio Max will put out a new version to keep up with Oblivion's graphics. (I hope) I would hate to have to deal with MW level graphics in a world that looks so good.