I'm still plugging away with my new character using Oscuro's mod. I think it gives some benefits to the bow, because archery is now actually useful and it doesn't take 500 arrows to kill the more powerful baddies.
I think it'd be neat if the high-end arrows would either be sturdy enough to survive impact (i.e. 100% recovery rate from corpses) or get a damage bonus for breaking off inside the body (2x damage, 0% recovery rate).
Next version of Oblivion needs to do a better job managing poisons. 1 hit is just lame; make it 3 or 4 (for melee weapons) or be able to poison a whole quiver at once (or up to a certain # of arrows, like 1 potion for 50 arrows). You'd probably have to nerf the poisons to compensate, though.
Nathan