Oblivion is what it is, the freeform gameplay is the game, making it a third the size would lilely have made it less of a game.
The Main story in Oblivion is actually pretty weak, if that was the sum of the game, or even the focus of the game, it would have been a much lesser product.
Oblivion is like the anti FF, where in FF the game is the linear story, in Oblivion it everything outside the linear story.
Well it took me 40+ hours to complete Kotor and I wasn't laying around too much, I would't call that short even if there are longer games. Kotor was long, Fable was short, Oblivion is eternity.
Hmm, did my first run through in 25-30 hours (with more or less all quests), you're right, that's not short. I guess it's a good game when a longish game feels short.