If I were homeless in Cyrodiil (Oblivion), I would wander the roads looking for bandit camps. If I saw one, and didn't see anyone there, I would approach slowly, and then scan the area for corpses left by some adventurer who couldn't carry all of the loot. I'd grab some nice piece of glass or ebony armor, and then run back to town. I'd be able to eat for two years.
I do find it very satisfying that in Oblivion, when you kill enemies wielding weapons and wearing armor, you can take their weapons and armor. You don't kill some orc bandit wearing full plate armor holding a claymore and then find that all he's got in his inventory is a feather and a decorative medallion. It ends up being that in Oblivion, you find enough sweet stuff to justify a trip back to town after one or two kills—or, if you're as weak as my character, you can't even carry an extra suit of armor at all. It's a nice change from pretty much every other RPG, where enemies drop semi-random things upon death, and never what they were actually wearing and using.