It does have a unique leveling system. It's actually more realistic than other games though, in terms of skill development at least. I think that taking out the attribute system would have solved all of their balance and progression planning issues, or at least tweaked it so it doesn't matter what skills you increased to get to the next level.
Happily they agreed with me and made that fix in Fallout!
Oblivion is a good game though. It's not a hand holding experience though. It's very much a case of the game saying, 'So what you wanna do now?' and it has a very heavy emphasis on side questing. If you don't really like it, then stick to Bioware type RPGs, where the story is the main focus.
Personally I didn't like it. Not because of the combat system, or the complicated character progression, or even because of the heavy side questing. It just felt so damn lonely. It was like playing an MMO without anyone else on the server. There is something cool about being the lone adventurer, trekking across mountainsides to find the magic maguffin, but sometimes you want people to recognise you.
Hmm. Think I'll try it again though. Maybe get past level 10 this time...