I notice a few things I'd like to change, they are quite minor but I'd like to discuss them:

Opening the menu for Magic/Skills/Items/Map, in my opinion shouldn't have to freeze time, same goes for the favorite hotkey. I can't change this in the options either. If anything i'd like to see it slow time down 25-50%.

The other limited option change you can do yourself (console users) is take away the HUD, but it takes everything away, I can't see how much gold I just picked up out of a coin purse at that spot, or what Skill a particular skill book has given me.

This is just nitpicking...

Out of curiosity what type of character do you tend to play? Personally, I would hate it if time didn't stop when my mage needed to switch spells. For it not to stop I'd really want on-screen action bars with all my abilities listed. Of course, it would be amusing to watch NPCs stand around and shuffle through their favorites menu when they needed to switch abilities ...

Theif and I only bring a few items so I can quickly identify with what item I will use given the situation, instead of digging through wherever items are stored.

The way I see it, the favorites menu is just an extension of hotkeys. It takes a fraction of a second to hit a hotkey, but the favorites menu, though pretty good, is still awkward enough that it takes a while to browse through it to get what you want. I don't have any problem with it pausing the game, since that makes it function more like a hotkey (i.e. it doesn't waste any combat time.) As for the other menus, I think anything that doesn't have a direct impact on combat might as well happen during a pause menu, so the only ones I'd maybe want to change would be the inventory and spells menus. Still, that would have a huge impact on things like poisons and potions, you'd really be limited to what you can hotkey (and keep in mind consoles have far fewer hotkey slots than PCs, so you'd end up with a different impact on balance for the different platforms.)

Set up fast Keys, if you don't want your game to pause. I like that the fact that it does.

No pause, the witcher like potion system and Reduced HUD would be greatness.

The Witcher Alchemy system that took 5 minutes to drink one potion? LOL! Yeah...how about not.

It's really not. Allowing yourself to jump into a little portal that freezes time so you can chug 100 health potions in the middle of a fight is a serious game play issue.

One of the principle advatages in a Single Player game of any genre is the ability to pause the game. I wouldn't play a game that didn't have some form of pause. Too much pause is bad though, so you have a point. I found that after learning to use favorites, I rarely use the menus like you are.

Slowing down time is kinda pointless. Going into an inventory is breaking immersion anyway, so you either pause or give people hotkeys.

I really dislike when it pauses when I go to my favorites and it is REALLY annoying for mages on consoles I don't want the game to pause when switching between spells. (I liked the 8way hot key in oblivion)

Got http://www.gamesas.com/topic/1338190-activities-that-freeze-time-and-those-that-dont/ and similar possibilities. I'd be all for time passing under all menus, almost, except that the System menu should still pause time so (1) you can save your game in peace and (2) you can go take a pee-break without quitting the game.

If I could find things quickly in menus, then the game would not have to pause. But, since I can't, then it needs to wait for me.

here, here, I got so much crap that I like to keep on me and the fact that console cannot name items, if it didn't pause then I would most deff. die in seconds in every fight.

( I like to vary my combat technique during combat)