http://www.youtube.com/watch?v=VDNo8aNoF34
I never truly noticed how grayish the world was but wow. Not to say it's not a beautiful game, but this mod just adds more life to it.
This basically does Oblivionize the game. And do what all the Morrowind graphic mods have done. The "grayness", as you describe it, is IMO one of the absolute best things of this series of games. For ONCE everything isn't so nitpicky overly clean, colorful, happy, cheery, 3D-graphic-metal-shiny and light. Until with this mod. SIGH! <_> These colors take the living on hard times and there being a terrifying factor (dragons, war...) involved away, and somehow conveniently medieval-paint-alizes the great color palette I've praised everywhere.