Oblivion's Intuitive AI, Has an NPC surprised you? Options

[Ibis]

Have you noticed a lot of differences in the NPCs of Oblivion compared with those of Morrowind? I haven't actually played long enough for anything spectacular due to my waiting for adequate computer hardware to play at all.

But my hubby Cain had a weird thing happen. He was fighting guards at the gate with his Brawler Orc (who fights hand-to-hand wearing heavy armor) in order to level up fast. Some Orc citizen wearing a brown leather vest who was standing near his mod chest, suddenly reached into his mod chest and took out the uber fireball-staff and began hurling fireballs at Cain's character. He wound up getting killed by his own weapon that was in the mod chest for another character!

Weird, huh? Anybody else have an strange happenstances take place?