Hmm, too bad. Now I'll start thinking of a good in-game reason for why you can't grab it. Let's see.
Remember in Morrowind how the Ordinators would beat the crap out of you when they saw you wearing their armour? Maybe it is something similar here, the royal guards would dish out a beating for defiling their armour. (not to mention killing their comrade.)
Now unlike your character in Morrowind, your Oblivion character is smart enough to know that the guards would try to kill him/her for having that armour. Result, your character refuses to take it out of fear for being killed.
This sounds good enough to me, though there are still a couple of holes. What if you play a thief who steals everything that isn't nailed down? This sudden attack of lawfull behaviour would be very weird. I know that good old Luper would frown on this. He would see this as a big waste of what could've been a fine addition to his collection. And he never cared for the guards anyway.
