Definitely overkill! My Q6600 and HD4870 max it out. If you're looking to build a new rig, just get the best you can for the money. I wouldn't use Oblivion as the absolute benchmark any more.
I can max it out at 16x12 on my build. When I had a single 4870, I would turn the grass and shadows down a bit to prevent stutter outside.
It's worth noting that the Shivering Isles are more demanding the the core game, so if you're going to play the add-on, you might need slightly higher specs.
Look at my specs, no problem maxing out oblivian at all, it is now slightly older on performance needs so anything built 2008/9 will do ie 2 core cpu over 2.5ghz and 4850 4870 and above or gtx 260 and above