I never had any problem with the level scaling in Oblivion because I both didn't think about it and appreciated the specific advantages my character developed over time. It felt natural and fulfilling to have combat scenarios that were business as usual until I decided to pull out any awesome new loot, magic, or skill upgrades I had earned.
Overall, I think the level scaling encouraged the developers to rely on satisfying new skills or items a lot more than on simple number-building.
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