After watching "The Great Battle of Skyrim" video I'm pissed that I only encounter less than 15 enemies at one time. Could this be changed with an update?

I think the only way to have more enemies on screen is to use console commands. An update could change it but I doubt the consoles or average computers could handle it.

more characters = more rendering = more lag = unplayable

You'd likely only be able to experience this with mods, because as Immolator001 said, consoles and average PCs can't handle it.

If you are on PC the Wars In Skyrim IV mod does this:
http://skyrim.nexusmods.com/downloads/file.php?id=6176

Yeah old computers would have a hard time running with loads of NPCs on screen. Notice in the civil war quests that the bodies "disappeared" rather quickly? That's why. But I agree I'd love to have a more "hack and slash" element and smash my way through corridors and halls of skeletons for ages - but that's a lot bones flying through the air and even my computer with could have difficulty with that.

not to mention gamebyro (whoops creation engine) isn't built for such scale in mind. It possible to do such but unless you have a decent computer you will notice a good amount of FPS drops because it is not optimize for such. The engine is and everything about Skyrim is centered around 360's limitations if BGS could add more they certianly would I hope but right now they are using so many techniques to cut down render issues such as small FOV and large as hell weapon models as well as cells to make sure it doesn't load that much

You're correct, none of the Elder Scrolls have really ever been able to support such numbers because of the engine, that said, i can spawn 150 men via console with no lag what so ever and yet on the very same computer spawning anywhere near that number on Oblivion causes an outright crash. So at least the engine is optimised a lot better than previous versions.

Still, i would say the main reason battles are small scale is simply because of the consoles, this is not me having a dig at the console platform by the way, not at all. A lot of lower end pc's and consoles would just struggle to run smoothly with so many NPC's on screen at once. This is why the population of towns and cities are like 10-20 people. Once the next gen-consoles are out then perhaps we can look forward to things on a grander scale with the next Elder Scrolls. Until then however, i would recommend watching the video mentioned by the OP, very well edited and a jaw-dropping battle indeed.

I do hope next gen consoles are much more free then current generation in terms of hardware various things will be achieved if such happens. Up until the point the next DX version releases (or siginicant one at least)

Are you kidding me, I had to turn down my settings during the major civil war quests, I'm not doing that every time there's a large scale battle

Yes, I had some serious framerate issues during those quests too. The battle just outside the Whiterun gates was nearly unplayable on my computer. And turning down the graphics setting isn't going to help on most systems.

One should not compare a machinima to a video game. That video was carefully edited to remove framerate stutters. Even then, it seemed to me that there were sections of the video that looked jerky.

i want at least the same number as oblivion's battle of bruma (which may have been in the civil war, but i have not seen nearly the same ammount, i might looka round better next time i do battle for whiterun), we gave up greaves to get more but we really did not get more

You are assuming because your computer cannot handle it then none can? like i said, i can spawn 150 men in Riverwood (without fraps) with no lag at all. Very playable. yet, if i spawn 200 my computer starts to lag. The guy who made that video has a very high spec PC so i don't doubt for a second his computer is able to get 150-200 without too much trouble. I doubt he could go much higher though as the engine its self might not be able to handle such numbers.