That said, Oblivion's non-magic combat - while still not good by any stretch - is a better fit for a first-person ARPG than Morrowind's dice rolls.
This is the only part of your post that I in part disagree with, but I acknowledge that I am an outlier in this regard. See for me, the combat in Elder Scrolls games is so atrocious, that I actually prefer to engage with it as if the animated motions were tangential ornamentation instead of virtual kinetics in a poorly realized physics environment. The Morrowind system has the disadvantage that combat encounters can frequently go on for too long in the early parts of the game when the multipliers to hit chances are so low. But given how many variables go into calculating each aspect of combat, taking into consideration each body part and piece of armor, the weapon class and material along with the direction of each attack &c I prefer the dice-roll approach to the real-time one of Oblivion and Skyrim.
I do think that the Oblivion style is as you've said a better fit for a first-person action RPG if I consider it from a broader perspective, I just happen to prefer the other for personal reasons. Maybe it is because I grew up with Baldur's Gate and played Morrowind and Daggerfall first, and even though I'd played and enjoyed many other games with different combat mechanics I always felt most interested in that style. I can certainly see how going backwards it could be a jarring experience to play in first or even third-person perspective and see your blows visually connect with the target only to hear the sound of your weapon moving swiftly through air and realize you technically "missed", over and over again.
But you pointed to many of the things in Oblivion that were changed from the earlier games that I had in mind when I made my previous post. On top of all of that you can add the NPC faces design and you're talking about a major travesty. The faces in Oblivion are so grotesque, so awkward and absurdly malformed, that I simply cannot take the narrative of the game seriously. From the very first scene when you are exposed to the butchered face of the emperor, the same one who in Daggerfall was so laudably portrayed by a live actor, a feeling of dread and nauseous revulsion begins to rise from the center of your being. Then when you're out and about in the Imperial City, the capital of the entire Empire, the "City of a Thousand Cults" that doesn't even have a thousand people, and you start speaking with guards and that God awful minigame appears and their facial expressions begin animating in uncanny spasms, or the homeless people who not only alter their pitch, tone and mannerisms between lines but occasionally change voice actors, it begins to dawn on you that you might actually be dead and are in hell.
This is to what I was referring when I mentioned that I'm not able to return to Oblivion. I actually tried to a few months ago, and wasted so many hours perfecting a mod list with minimal environmental changes but with many changes to the mechanics and visuals, and had to try so many different things just to get it to where it was relatively stable and only crashed once every thirty minutes or so, yet even with mods that make the NPCs not only tolerable but in some instances even mildly pleasant, I stopped playing after only a few hours. I really tried to get back into it and had added many interesting looking mods to try out, got everything compatible and working about as well as can ever be expected with Oblivion, but I just couldn't maintain any interest.