Highly recommended when using many BSAs in Oblivion.
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Other user's assetsAll the assets in this file belong to the author, or are from free-to-use modder's resources
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Apparently Oblivion also had the mod limit bug. Here is a potential fix.
You will need OBSE for this plugin to work. Simply overwrite your data folder with the folder in the zip file. An ini file will be generated in the plugins folder where you can edit the maximum allowed handles. Do not edit this if the fix works. It will not increase performance by lowering it, there is also absolutely no point in increasing it. This fix should have no conflicts whatsoever.
The game has a hard coded limit of 512 maximum file handles that could be opened at once. This fix simply bumps that up to 2048 to allow for more room for file handles. I picked 2048 because it is the maximum number that Windows usually allows and the more the merrier.
Happy modding!
Thanks to lStewieAIl and RoyBatty for helping me along the way.