I played an atronarch character in Morrowind and found it much more balanced. It seems kind of shoehorned into Oblivion. The fact that magicka regenerates constantly in Oblivion, while it didn't in Morrowind, totally breaks the sign. I'm curious as to how you got by, especially early on, when very few enemies actually use magic against you. I can see it sort of being viable later, when you can easily absorb all magic cast at you, but even then you're going to be SOL fighting against non magic-using enemies (which make up a good majority of what you fight). I mean, I can actually see it as more useful in a non magic-based character (like a fighter), where you only use magic sparingly. Then the magicka regen might not be crippling. But you'd still have to really level alchemy so you can make magic regen potions to make up for the fact that you don't regenerate at all.
edit: the inability to create enchanted items that can cast magic also really hampers the atronarch, as my atronarch character pretty much abused that in Morrowind to complement my own spellcasting abilities.