From a technical point of view, Oblivion is very far from impressive. Compared to the complexity of games like NWN2 and G3 it's a rather simple piece of coding. Why? Everything has a single startpoint and only one outcome - every quest, every dialogue, bugdetection in such a code, where everything is linear, is a whole lot easier than bugdetection in complex code with multiple outcomes on virtually everything.
If you truly look under the hood of Oblivion, it's actually even less impressive than the game itself is. In fact, it looks more like GTA under there than any of its competitors to the RPG GOTY award. Of course, Oblivion looks stunning, and there is no doubt it took skill to make it look so beautiful, but the code itself is not advanced or impressive.
Well, since I assume none of us have access to the source codes of said games, I estimate we can't speak too intelligently about the facts.
I personally consider the marriage of the licensed engines the most succesful I've seen so far. The Havok engine for physics, the 3D engine (GameBryo?), the SpeedTree engine, etc. are more or less seamlessly woven together in a way that far surpasses what is happening in Gothic 3, from a visual standpoint.
The physics in Oblivion, especially including the "realistic" mod, are amazingly well done. I don't think any game apart from Half Life 2 can rival this implementation.
Gothic 3 doesn't even appear to have physics of any kind.
I also find the Radiant AI to be more interesting than the scripted alternative in G3, even if it doesn't generate quite the same feeling of realism. Lots of interesting things are possible by playing around with the AI, though it rarely gets noticed because there's no good reason to play with it really. If you can't recognize at least this aspect as something impressive "under the hood", then you're being a bit harsh.
The dungeons, though separately loaded, are several times more impressive to look at than anything underground found in Gothic. No dungeons in any other CRPG come close, and I don't think there's any dedicated FPS that exceed them in visuals either. This isn't just "artistic" skill at work, it's also the fact that the engine runs extremely smooth compared to what goes on, on screen.
The water is done better than any other game I've seen, except perhaps for Silent Hunter 3 which is all about water.
The combat of Oblivion is also far more visceral and exciting, and is probably one of the most succesful first person melee combat engines ever made. This is a pretty amazing achievement, really, and I think it gets overlooked because it's "actiony". I know some people think it's easy to code/design/balance a combat engine like this, but judging from all those attempts that went wrong (previous ES games among them), I think it's safe to say this takes quite a bit of work to get right.
The stealth aspect rivals Thief, which is the generally accepted leader, and nothing similar in G3 comes close to this part of the game. The bow mechanics and feel is FAR superior to Gothic. It's practically a mini-Thief game in the midst of all the other gameplay options.
Magic is very pretty and combined with an excellent lighting engine, and some effects like Paralyze/Nightvision/Camouflage are very, very well done. Gothic 3 can't even light a torch without pausing for several seconds.
Don't get me started on the audio aspect, as that's currently bugged in G3 and apart from an amazing soundtrack, G3 is particularly weak in this area.
I admit the quests are pretty linear, and though there ARE several outcomes (just take the DB questline with rewards depending on how well you did), they're not exactly in the same league as Gothic 3 which has a more complex quest structure. Unfortunately, it lacks any kind of compelling cinematic aspect, which Oblivion does. Of course, it depends on your idea of compelling cinema, and I don't think it's that good, but the Dark Brother questline was pretty amazing for the most part.
Yes, the heavy scripts of Gothic 3 must have taken some complex logic coding, but that's not enough to triumph over Oblivion. I mean they made one of the most advanced AIs of any game to date, even if it's not that big a part of the gameplay.
All this doesn't make Oblivion *fun*, but denying its amazing technical accomplishments is just... well... denial.