I can kinda see why they went with Oblivion. For one, Morrowind would be harder to do because it relies heavily on invisible dice rolls and she stats of you vs the enemy for...basically everything. From hit chance, to if your spell is succesfully cast, to how much damage your armor (or the enemy's) eats up. Unless they gut that entire system and do a more modernized one instead (like Oblivion/Skyrim's)
Another reason i wanna say they picked Oblivion is because, frankly, it's the middle redhead child of the "modern" elder scrolls main games. Everyone praises Morrowind and Skyrim, but Oblivion....yeah. I love it, it was what Skyrim was to many players, but yeah it can be rough in a lot of aspects. Sometimes even more so than Morrowind (YMMV. I could easily get used to Morrowind, even vanilla. Everytime i go back to Oblivion, I have to make myself look past the roughness to see the good stuff).
IDK, i see this as a great second chance for the game...and, foolish it may be but, I'm also hoping they restore Cyrodiil to the jungle it was hyped up to be in Morrowind and the pocket guides since the tech is there now, plus they no longer have to cash in on the Lord of the Rings movies. They won't. But i can dream.
It's not so much the dice rolls that are the problem...but, they kinda are...let me try and explain what i mean
It isn't so much that going back to Morrowind's style of gameplay is a bad thing. Like you said, a lot of games do that and do it well, even today (Baldur's Gate 3 does Dice Rolls for everything too, and its great) it's more of is Bethesda going to keep it intact (either completely or modernize it) and risk potentially alienating the part of the fans that have only played Skyrim (A large part of players, at least from what I've seen) or are they going to scrap it and replace it with a more Oblivion/Skyrim system, thus potentially alienating the ones that are wanting an Elder Scrolls game to go back to when there were tangiable RPG mechanics in there (and that's not assuming they don't try and have it both ways...IDK how that'd look, but if you try pleasing everyone, well...).
Did that make sense? I'm kinda running on an energy drink and a dream atm
But really, i think it's more of they looked at Morrowind, Oblivion, and Skyrim, and just went "out of those 3, Oblivion's the one that could use the tuneup the most" (again, it's the redhead middle child, sandwiched between the much more universally loved Skyrim and respected older Morrowind).