I agree with DoomedOne on this one. I usually have stayed away from the whole mounted combat arguments, but I just want to point out a few things here as to why.
1. One person on horseback is not a cavalry. Cavalry were effective because of many many horses trampling through the ranks of enemies. Indeed the moving mass of the horse added greatly to the penetrating power of any wielded weapons ensuring to make it through the heaviest armors and shields. However you had little ability to aim at a particular target. You simply rode into the ranks of infantry swinging hitting people by shear chance. 2. Cavalry was only effective in open plains. Get them into a forest and infantry had a huge advantage over them.(A lot of Cyrodiil is forested) 3. A few civilizations used horse archers to good effect, but not like how you imagine. They would ride close to infantry, stop, and then fire heavy arrows in a high arc into infantry ranks and then ride away quick when the infantry charged them. It would be extremely difficult to shoot an aimed shot from horseback even if stopped much less moving. 4. Wearing heavy armor would be pretty much out of the question if you intended to mount and dismount your horse by yourself. Most knights in plate armor were hoisted onto their horse using a crane. Once you fell off you never got back on again during that battle.
Now I do realize this isnt a simulation and that suspension of disbelief is a big part of fantasy and roleplaying, but the truth is that Oblivion is very realistic in the sense that horses were used mostly as a means from getting place to place.
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