Oblivion allows for instant travel between major cities- does this mean we can expect a lessening of the kinds of roadside encounters that helped define so much of Morrowind? Are there any incentives to walking from place to place anymore, instead of just click-porting everywhere?

Well, the only places you know about in the beginning are the major cities. However, that leaves out more than a couple hundred other places you can’t fast travel to. And you can only get to those places by walking (or riding a horse) there. So we haven’t done away with exploration, far from it. What we’ve done away with is the need to walk back and forth between the same two locations 500 times. You can still do that, if you want, or you can fast travel if you don’t have the time. But we send you out into the world for all kinds of quests, and so you’ll be doing plenty of discovering and having lots of roadside encounters as you go out into the wide world.