Probably the first "oddity" most people become aware of with the physics in Oblivion is - why on Tamriel do Iron Arrows FLOAT?!?!?
This may not be an "oddity". You asked the question "why on Tamriel do Iron Arrows FLOAT?!?!?". Well, why does anything float? An object's buoyancy depends on the fluid it's immersed in. If the fluid has a greater density than the object, then the object will float.
An Iron Arrow is composed of multiple parts: 1. Arrowhead 2. Shaft 3. Fletching 4. Nock (rearmost part of an arrow that keeps the arrow on the bowstring)
If the density of the arrowhead is less than the buoyancy of the shaft in a given liquid, the arrow will float. The arrow will also float if the water has a greater density than the arrow as a whole.
Evidence suggests that the water in Tamriel is very dense; NPCs do sink when they initially hit the water, but their bodies then float back to the surface. This happens even if they're wearing a full suit of armor. This suggests that either the water is very dense, or that people & creatures of Tamriel (and the Shivering Isles) have some innate factor that makes their buoyancy greater than the density of what they carry. How else could a knight in full armor go for a swim without drowning?
Unless we know the full physical properties of everything involved (water, weapon/armor materials, bio-matter of NPCs/creatures, etc.), we can't actually determine if this is an "oddity".
All that being said, I don't know if this can be changed with mods. The basic "physics" are part of the game engine, which players & modders don't have direct access to. There might be some OBSE functions that can affect these things, but I'm not well versed in that arena.