StingingVelvet: It basically sounds like you just want better animation and feedback, which is fine. I think you have to remember the time the game came out though, and the fact games can't focus on everything. If they had spent time making dodge animations or deflect animations it probably would have cost them something else. Also Gamebryo has never been good at animations, even in Oblivion.
In any case agree to disagree on "a hit should be a hit."
Not really because what I'm saying is that a miss should have consequences. Either it's a clear miss which would leave you a bit more vulnerable. Or it forces them to react which at the very least means they're on the defensive for that moment.
That would make a huge difference to the combat all by itself.
You say they can't focus on everything, but we're talking about a game with nothing in the way of AI. After all, you can sneak up to someone's face in broad daylight. A game where the majority of NPCs are nothing but place holders fixed to the spot and where most places looked underdeveloped.
So clearly they weren't focussed on everything and still wouldn't have been even with better combat.
I think that the game's main problem is that it wasn't originally designed to be single player. So things like AI simply weren't taken into account until some time after they had a change of heart. Doesn't explain the combat though...