What's New! (July, 2023):
Massive rewrite introducing customizable ini, new features, bug fixes, and optimizations.
Let's address the two big ones.

A) Variables can now be customized via an ini. The level at which the player starts receiving damage bonuses, and how often they receive a bonus (every level, every two levels, every three, etc.) can be tweaked by the player.

B) An optional but highly recommended balancing feature, which reduces the bonus while using high-speed weapons (ex. daggers) and increases the bonus for low-speed weapons (ex. Warhammers). This affects the statistical hierarchy of weapons in a way that is far more intuitive than the vanilla game, and offers additional flavor by buffing heavy two-handers and the previously inferior Blunt class of weapons. The benefits of this are clear, yet hard to describe. For those interested in the nitty gritty, read more here. How bonus damage is modified by speed can also be changed via ini.

I have also included a downloadable calculator spreadsheet for those interested in seeing how these variables all work together.

Description:
A quick example of what this does:
For a level 25 player, this mod applies a universal +20 damage bonus to each hit they strike, regardless of weapon skill or magic effectiveness.
At level 25, the starting Destruction spell 'Flare', now does 26 points of damage, rather than 6 points.
This only applies to the player.

If you like the sound of this, feel free to stop reading and try it out. Skeptics read on.

The Why:
While this may sound game-y or overpowered at first glance, it makes much more sense when you remember that the health values of many enemies are directly tied to their level, which tends to match the player's level due to Oblivion's level scaling. This is the basis of the famous 'Leveling Problem', where player level-ups might not result in direct increases to damage output, but would absolutely result in increases to enemy health pools.

Even if one were to level efficiently, players would eventually reach a soft cap in damage by the mid-late game, even while enemy health continues to increase. This leads to exploit-territory strategies to stay competitive, which I'm not terribly interested in.

Many modders have made attempts to rectify these issues with uncappers, damage modifiers, stat tweaks, overhauls, you name it.
It's a very impacting design issue with many facets and schools of thought on how to address them.
This mod is just another two cents on the copper mountain.

The benefits of this approach are five-fold:

• Retains the flow of combat in the early game (in the way that damage-multiplying mods might not)
• Combats the sponginess of enemies in the mid game
• Uncaps damage output in a meaningful and elegant way in the late game
• Diminishes the need for efficient leveling, as each player level provides a raw boost to combat effectiveness
• Scales the effectiveness of combat spells, allowing Mages to be less reliant on spellmaking
  

Highlights:

• Vanilla feel and low immersion-breaking footprint. Forget you've ever installed this mod.
• Low performance impact with xOBSE Event Handlers
• Scripted to be compatible with combat overhauls and other stat-changing mods
  
  

Recommended Mods:
Real Retroactive Health Formula
Attribute Progression Redesign

Special Thanks:

• xOBSE Team and UESP for script documentation