Balancing is great -- the more balance, the more challenges we can experience without making things too hard. Here's a collection I'll be editing in from people's consensuses:

NPCs and AI
- Dragons are too easy (mostly because their AI is ridiculously stupid).


Creation Skills and Perks

- Smithing, Enchanting, and Alchemy levels should depend far more on the quality of the item. Right now their base rate of advancement is far too high, making it very easy to power-level using the lowest tier items.

- Alchemy is too lucrative a money-maker by using bought items.

- Some Alchemy potions are far too overpowered, especially at lower levels.


Stealth and Thievery
- Pickpocketing is too easy and profitable, even more so if you abuse Quicksaves.

- When most NPCs in the world have up to 300 gold to Pickpocket, it's far too easy to pickpocket <1500 gold (Training Exploit)

- Backstabbing damage can become ridiculous, up to 60x damage!

- Archery is too powerful with relatively low levels of Archery and Sneak levels, partly because of stupid AI.


Magic
- Heavy Armor provides too little penalty to Mages and Assassins while providing ultimate protection, especially with Steed Stone.

- Destruction damage is rather lackluster, especially at higher levels (35+). Runes are even worse.

- Spells overall don't scale as well as Weapons, EXCEPT Conjured Weapons.

- Conjured Weapons get too powerful too quickly, making Conjuration way too powerful with powerful weapons AND summons.

- Restoration Undead Nuking is rather ineffective.

- Mana Regen svcks pretty hard compared to Mana Cost Reduction, making multi-school builds less effective.

- At high levels, going armorless doesn't scale as well with all playstyles as using armor (lack of proper Alteration scaling).


Other Gameplay Mechanics
- Some Racial abilities are too powerful (Orc's Berserker Rage) while others are too underpowered.

- At higher levels, especially 35+ (when their Fear can stop working), the Werewolf form is really lacking.

- Shouts are pretty darn powerful without any penalty for using them.


Edit: Removed my personal suggestions, added topics from other people.

I had an idea here, but it'd be a bit of a pain to implement. Make ALL heavy armor decrease magicka regeneration by 80%, All Light armor reduce magicka regeneration by 30%. Also disallow any +magicka regenerations enchantments on Heavy items.


This I don't completely agree with, I really like the idea of making daggers viable in this way, currently theirs no other real reason to use em. :/

As for my suggestions!

Destruction is all around a poor damage build. The damage is low compared to ..everyone else, and at least 1/5th of the spells are either useless because of limitations(Rune spells - only 1?) or are too mana intensive for anyone to really be able to use(it takes me ~6 FULL mana bars to take down a dragon on master.)
-Damage scaling isn't there..at all. 1 Destruction or 100 destruction - I believe this is a bug.
-The perks are lackluster. +50% damage? Every other tree gets +100% + crit chances/increased damage/other misc effects.
-No gear with + damage really warrants *twice* as much damage, not half as much.
-With my prior change, This would be the squishiest build in the game(it already practically is...but you can still wear full heavy) - and as such should be a power house, not a wimp.

Conjuration/attacking skill scales FAR too well.
-Double Scaling(from Attacking skill, then from conjuration) it makes it FAR too powerful early-game.
-This should probably be one of the weakest personal damage builds - and it turns out to be one of the highest.

Alteration/Illusion are beautiful.
-Only change I'd suggest is allow spells to continue up to level 50, rather than stop at lv 30(Illusion).

Restoration
-Needs more reason to actually use it... 3 points for +250 hp when dying is the only real use I can find for it =/
-The increase to undead damage really needs to raise. A lot. Talking like quintuple whatever it is now.

Alchemy/Enchanting - breaking the game since day 2.
-Remove Enchanting potions.(They outright break the game. Hi2u +1000% enchanting)
-Make enchanting level a little faster.

Smithing
-Swap daedra and Dragon in skill requirements. Daedra should take 100, Dragon should take 90, imo.

Lockpicking
-Treasure hunter should be 2 points, 50% and 100%.

Pickpocket
-Reduce chance to pickpocket gold exponentially by its value. Over 1k should never be pickpocketable. This would stop the exploit of pickpocketing trainers after skill 50, roughly. This seems like the simplest solution.
-Extra pockets just...seems so...out of place, and nonsensical. You can carry an extra 100 stones by having another pocket? Replace it with something? Maybe Paralyze for 10 seconds, increasing the chance to pickpocket?

Speech
-I really feel SOMETHING in here should tie to shouts...

That's everything I've thought of so far that I'd like to see!

Sorry, just had to note here -- it's already implemented this way, although the max is ~1.5k gold. You don't have to train all 5 ranks available per level all at once, and it starts at ~300 gold. At Skill 50 it's still ~500 gold per rank. I've been pickpocketing *everyone* and honestly I haven't found anyone with more than ~300 gold on them, so I think it should start seriously increasing at ~100 gold. However, I don't really think it's an exploit IF you have the +50% chance to pickpocket gold perk, as then you'd be spending a perk and training isn't that important anyway. Maybe the perk could be changed to "+50% chance to pickpocket gold and you can now pickpocket more gold".

Also, as far as I can tell, Pickpocket Skill doesn't actually seem to effect Pickpocket Chance very much if any. I raised my character up 10 levels getting it to 100, because I like to pickpocket, and all throughout that I didn't really notice much of a difference.

Not sure if I can agree with this. First, why would armor do this in the first place? It's not like it cuts you off from your Magicka, it's sitting on the outside of your body. Also, I love playing as a Battlemage. While I totally agree with you that there should be something to make it a bit less viable, it shouldn't entirely cripple them, either. I think making the mage use up his enchantment slot on his armor to balance out the problems with using heavy armor and magic simultaneously is actually a reasonable idea. This prevents them from using the armor for health regen, stat boosts, etc. enchantments.

Oh nono I don't want to break pickpocketing - but with dropping 6 points in pickpocketing I have a 90% chance to pickpocket 2400g that I spent at the trainer. I think that's a bit of an issue. Tossing people to 75 in all skills + 100 Pickpocketing and level 50+ is a bit.......ya'know. This was the simplest solution I could come up with to it.


Hmm..Maybe scratch the last part of my suggestion - Make it so that you CAN enchant it with +magicka regen to counteract the downfalls I put in place prior?

The biggest balance issue, as far as I'm concerned, is the difference in damage scaling between destruction magic and physical damage. Either change destruction perks, enchants, and enchants to provide +damage in addition to magicka savings, or reduce the scaling on physical damage from all of these sources. The former seems to be the easier fix to me.

Another big balance issue: alchemy is way too profitable. I don't think player-made alchemy potions should be worthless, but you shouldn't be able to buy up all the ingredients in every alchemist's shop in skyrim, mix up a batch of 50 or so potions, and then sell those potions back to various vendors for literally 10-15 times what you paid for the ingredients, all at only about 70 alchemy (where my character currently is). It's even more insane than Oblivion was.

Sorry, I'm not trying to be argumentative here, but did you actually try this? As currently my character has 100 Pickpocketing, 1/5 Pickpocket Bonus, +50% chance to pickpocket gold, and still gets ~35% chance to pickpocket ~800 gold, with 0% chance at ~1600. Haven't tried with a full set of Enchanted Pickpocketing Bonuses and 5/5 in the Pickpocket Bonus, but if you're that much invested in getting your money back...

2321g, 54% chance to steal while they are sleeping - can easily be boosted to 90% with pickpocketing items. (should be 4% chance before anything, with just 5/5 light fingers, and cutpurse.) +20% ring =74%, 20% neck = 90% - unsure if anythign else can be enchanted - and this only requires low-end enchanting.

I do see what you're saying though - I think perks are just too good for this. If you cut Light fingers in half, this instantly drops to roughly 1200-1500g - even while they are sleeping.

I think that's far more reasonable. I still think 80% is pretty steep though, unless you're referring to JUST for the main piece of armor, with no additional reductions for the gloves, helm, and boots. That's where you'd have all of your weight and restricted movement anyways.

Maybe tie it into the first perk, 15% per point dropped into it. You could level enchanting right off the bat and easily counteract it entirely - but it would eat one or two of your enchanting slots. I think that's a fair trade for all around the best armor.

You mean Juggernaut? I like that except for the fact that it somewhat punishes you for investing points into a perk, when all other perks almost always provide a boon with no negative side effects. I'd be more in favor of your original idea of just giving it a flat rate cap regardless of your level. Perhaps you could adjust it based upon the quality of armor, though. Ebony and Dwemer, for example, would be much heavier and unwieldy than Iron so perhaps they should restrict your ability more than a lighter armor like iron.

This would be pretty much the same as light armor restricting magic less than heavy armor.

Oh, I like that. I totally agree there.

That's part of point of the crafting skills. They make you into profitable craftsmen.

Otherwise, I agree with everything else that has been stated, but with a few additions:

We need a way to select skills we don't want to ever have level up. Quest punishments like +1 to two handed (for my mage) are not OK. This is a balance issue because it can end up leaving you facing enemies balanced for someone with a dozen or more useful skill ranks than you have. Hell, this alone could save destuction mages, since the core skills wouldn't get you past the critical 35th level.

A lot of the enchantments that aren't flat-out broken need tweaking. It's impossible (AFAIK) to make good mana regen gear, but it's easy to make it so that your spells cost nothing or next to nothing. Not cool.

I agree. It just brings us back to the same problems we've faced before though: "Why would I ever want to use this enchantment when this one accomplishes pretty much the same thing and much more?"

Seems Destruction Magic is a hot topic, here's an interesting thread about two mods already out:

http://www.gamesas.com/index.php?/topic/1277212-empowered-magic-found-on-skyrimnexuscom/

The first mod basically increases Magic Damage by 30%, while the second allows you to place more Runes. Kind of a hacky approach since we have no CK yet.

Edit: I moved my suggestions down here, away from the original topic, which I will add as people post them --


My Suggestions (feel free to reply with your own!):

NPCs and AI
- Random Dragons should be far tougher than Quest Dragons. Ideally, the AI should be improved. Maybe we can make them just more random with letting them crit.


Creation Skills and Perks
- Greatly decrease base rate of advancement for Smithing/Enchanting/Alchemy, greatly increase advancement based on the amount of materials needed / quality of item.

- Decrease Alchemy sell values so it's only profitable at high levels of Alchemy and/or Speech to use bought items.

- Decrease effectiveness of Alchemy at low-levels of Alchemy.


Stealth and Thievery
- Greatly decrease base effectiveness of Pickpocketing, increase effectiveness of Pickpocketing while Sneaking and From Behind. Ideally I'd like to see a debuff which decreases effectiveness of pickpocketing the same person for X minutes, and/or makes Pickpocketing more about pickpocketing as many items as possible at a single time.

- Instead of Pickpocketing Gold's effectiveness capping off ~1600-2000, require ALL Pickpocketing perks to go far above 300. Also remove Paralyze exploit.

- Steed Stone bonus (Armor weighs nothing) should not effect Sneaking, or effect it less.

- Change the Shrouded Gloves Backstab bonus to a bonus to Backstab critical chance and critical damage bonus. Items that stack with perks that give the same effect is rather overpowered.

- Alternatively, you could make Sneak Bonus Damage based partially on Sneak skill.


Magic
- The number of enchantments available for Heavy Armor should be further specialized so you can place far better Magic-related enchantments on Light Armor and Robes.

- The Enchantment effect which increases the amount of Magicka regenerated per tick should also increase the SPEED of Magicka Regeneration, making it more viable for more builds.

- Magic effectiveness should scale with skill in the school, while right now skill seems to just effect the cost. This is especially bad in Destruction and Conjuration for entirely different reasons.

- In Conjuration, the weapon stats should scale with level so you don't have near-Daedric-quality right at Level 1.

- In Destruction, damage should be increased, and/or added critical chance/bonus damage. (Take a look at http://skyrimnexus.com/downloads/file.php?id=382 )

- In Alteration, the "*Flesh" Armor Rating spells should scale with skill level, as well as the final Master spell. You could also decrease the default duration and increase the duration from perks.


Other Gameplay Mechanics
- Werewolf Fear, Health bonus, and Health regain should scale with level so it's just as worth it at higher levels.

- The delay between Shouts should progressively increase as you use them in succession. Ideally I'd like to see drawbacks to Shouting, like "Elemental Fury - Increases weapon speed and increases spell charge time."

Armor reduced the effectiveness of magic in Oblivion(and Morrowind IIRC). I forget what the lore reason is though, something to do with making it more difficult to make the motions necessary to cast spells, which are apparently very delicate.

IMO armor should reduce spell effectiveness dramatically, and there should be perks in either the magic trees or armor trees to reduce the penalty(but not to nothing, an armored mage should NEVER be as good as magic as someone who doesn't wear armor, or you break the game balance.)

Magic based NPCs need to be toned down alot. Way too much damage in such little time.

As far as magic regen and armor goes, shouldn't it be gauntlets that give the worst penalty? I mean, they'd be the most restrictive of hand movements, and that's where the mages focus the magic to throw. While I've not been playing much of a mage, wouldn't it be lore friendly to think there's normally a lot of hand movement in spell casting? It'd give most mages a reason to leave the gauntlets off, and while they aren't the most important part of the armor, it would cut off any set bonuses gotten through perks.

I think they're too easy because of their terrible damage, not their AI. I think their damage, for the most part, should be more or less doubled, maybe just a 33% increase. It would have to be tested and balanced, of course, but I don't think their AI is nearly as terrible as their low low damage.

What build are you using? I personally don't find them to be too much trouble, as I have different sets of gear and potions for increasing elemental and magic resistance. Although the Restoration Wards are pretty useless from what I've found, and I hear the Elemental Protection perk on builds with Shields isn't that good either.

Some people say the Dragons are "just right" at higher levels, but at lower levels they're too easy. This sound about right? At Level 25, if I'm not careful, a Dragon's breath on Master difficulty can one-shot me, and they have that finisher IF they get your health low enough.

Level 6 dragon on Master Difficulty hits me for 95 damage per breath. ANY increase in damage AT ALL will 1shot me. Their damage is fine, their AI is awful.

With resists or with no resists?

I'm level 6 - this is the VERY first dragon. Of course I don't have resistance gear - it's only accessible if I go scouring the world for it. Which I guess would be fine in a mod...but should the second boss you face require you to grind up enchanting & hunt for a specific item to disenchant? It seems a bit...much...

Regardless of the precedent, the motions do not appear to be very delicate. Oooo swing hands and fire comes out! Lol.

Also, it all depends on how you look at it.. A Battle Mage will never be as powerful in Magic as a normal Mage or as dangerous in melee combat as a Warrior. Perks spent on one side of it will detract from how many you have on the other side. That Battlemage would have to sacrifice either his damage bonus to his destruction, the countless benefits to his conjuration, or the benefits to his restoration, in favor of say improving his one-handed or heavy/light armor. In other words, this is over-simplifying, but a level 50 Battlemage may have spent 30 perks on magic but 19 on combat. A warrior would have been able to devote all 49 to combat and a mage all 49 to magic.

Being a "Jack of All Trades" often means that you are Master of none.

I think minor added reductions to either regeneration or potency of magicka are sufficient as the Battlemage will then also need to sacrifice enchantment slots to counter these reductions.

Lore-wise, that might make sense; balance-wise, I might have to disagree. Gloves also offer the least amount of protection, so giving them the largest penalty might not makese sense. Also, as far as set bonuses go, I can't say I ever wear full sets. I suppose this may be common for other players though. I'm always finding a piece from a dif set with a better enchantment, etc.