Runs great on my P4 2.8 GHz Northwood, 1 GB RAM, and X800 XL. Most settings are on high with the exception of shadows and grass distance. I turned those down to help improve performance. It does hitch a bit when going into a new loading area, but then clears up a runs smooth. Oblivion has a a memory leak issue (like Morrowind) and will cause some slowdowns after several hours of play. Several people are getting CTD while playing, but I've only had it crash a few times on mine while exiting the game.
This game has some performance issues and is buggy, but it's very scalable and will run decent if your system isn't running a lot of stuff in the background. Remember to defrag your hard drive after installing this monster of a game.