Is it me or are a lot of the mods for oblivion better than the actual game itself?

like just normal mods that add extra functions, or do you mean things like morroblivion and total conversions/questlines.

Well, IMO, its a fact that vanilla oblivion is, apart for the better graphics and the physics, a dumb down version of morrowind, so almost any mod that's out there is an improvement to the game. What bethesda should do with all this upgrades is to release new better versions of the game with them implemented, kinda like they do with Mount and Blade, or with MMOs.