Good for equipment and fighting, not so great for magic users.
Option 2: Have the number keys cycle through magic.
Shortening the list by using favorites, "1" can cycle shouts, "2" for Alteration, and so on. You won't be able to change weapons/apparel like Option 1, but for a magic user it would be a good touch. Your favorites list would also be somewhat unwieldy with the length of it.
