This x2, some of the oblivion mods take a huge toll on your video card, even my SLI 460's stumbles sometimes in cities with some of the mods.
He's got a 1GB card, so that's enough VRAM for all textures. Where it really struggles is if you have a a 512MB or 768MB card, because some of those packs can use nearly 1GB of VRAM.
Detailed cities and landscapes on the other hand require a fast CPU and GPU. Streamline is great for that. You can set a min target FPS of 15 or 20 for exploring, and then have it automatically increase the target FPS by 10-15 FPS in combat.
Some of the mods I use are:
-Bananasplit Better Cities
-Unique Landscapes (the all in one OMOD)
-QTP3
-Improved Trees and Flora, Improved Fruits Vegetables and Meats, etc. by miknmel1
-Oblivion Graphics Extender v2 - I use the Godrays, Color Grading and FSAA shaders only. I find the Ambient Occlusion causes a huge performance hit and looks a bit wonky at times. Would be great if you could turn it on only for specific locations and objects. Depth of Field gives me a headache. My eyes are not necessarily focused on the same thing that the DoF algorithm *thinks* I'm looking at.
Don't use any distant LOD enhancements. Instead I cut back on the visibility some by using Streamline. That makes the world feel bigger too, since you can't see across the whole game world from the top of mountains.