Optimizing Oblivion, Part One
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I think you want to have a framerate of at least 18 for a rewarding gaming experience. If yours is still below that, what can you do? If you are like me, and want to keep the view distance for obejcts, items, trees grass and actors nearly maxed, there are certain things you can tune now. Turn off self shadowing, shadows on grass and reduce specular light distance. If this isn't enough, turn off tree canopy shades. It all depends on what your GPU is capable of doing. I can't give you a perfect answer, because your system will most likely be different from mine. But if you have to compromise visual appearance beyond what is pleasing to your eyes, then try an .ini tweak.
Go to the Oblivion.ini in your "My Games" folder and find iMinGrassSize. This variable will influence the density of the grass. The default value is 80. Change it to 110 or 130. Check your fps. On most systems, this will give you a massive boost for your framerate. On my system, I can leave it at 80, but going to 110 will bring me extra display speed. It's a matter of taste and priorities, really.