In Oblivion, a number of mods were developed to enhance first person mode. None were perfect, but all of them were awesome. The most notable, in my opinion, are:
http://tesnexus.com/downloads/file.php?id=20891 - Didn't allow you to see your legs when looking down in first-person, but added a lot of similar effects that fall under the same category of full-body awareness (swimming animations, head-bobbing, etc.) - ~15,000 downloads
http://www.tesnexus.com/downloads/file.php?id=18617 - Actually allowed you to see your entire body in first person, but the effect was REALLY glitchy and pretty unusable because of this. - ~50,000 downloads
http://tesnexus.com/downloads/file.php?id=36635 - A pretty good compromise, taking the route of seeing only your legs (which is better than nothing). Still glitchy, but more usable. ~3,000 downloads
There's definitely a good amount of interest in this, and I'd love to see a mod that followed through in a great implementation. Now that Skyrim's on an essentially new engine, with infinitely better animations, this should hopefully be a much easier (though still very difficult) task.
Mirror's Edge is a great example of a game that does something like this. However, even its implementation isn't perfect. In the concept art, you could see from the neck-down. In the full game, only waist-down. This would be a cool feature in Skyrim too, as you'd be able to see what you're wearing just by looking down, rather than by unrealistically traveling to a a 3rd person camera.
http://2.bp.blogspot.com/_EzCUJUU2Kts/SwxK0CGzpbI/AAAAAAAAABY/L-UJsy4Dgbo/s1600/586528-mirrors_edge_artwork4.jpg, what Mirror's Edge was supposed to look like (this is concept art, remember), and what I'd like to strive for for Skyrim.
I don't have a ton of experience modding (I've done some mesh editing and a decent amount of CS work), so I'd like to see what more experienced modders think about this, and what tools would be necessary to make this possible, even to the minimum possible extent.
Wow that was long-winded.

