... and as a consequence, if you play how you like and don't level up optimally, the level scaled mobs will oneshot you later because they have the same level as you and they are optimally leveled up ...

I believe they somewhat fixed it in Skyrim, but at the same time they made the world even more bland and generic northern fantasy. I've played a bit of both Oblivion and Skyrim and from what I remember Oblivion had colours while Skyrim doesn't.