Yet every title that Masterfag mentioned is exactly that, a competitive FPS.
How is Hexen a competitive FPS?
Protip:
Look up the meaning "competitive".
Except this generally looks more like this:
(minus the awful xpox logo).
Skyrim does have hud and this hud does convey all the information oblivious hud did.
Sure, removal of redundant weapon icon (you can see your current weapon anyway) and hiding unnecessary hud elements (like health/stamina/magicka bars when they're full) is good idea, but isn't a new one.
Now, the thing is that both your examples did worse than Morrowind.
Sure, Morrowind didn't hide bars when unnecessary, sure, Morrowind featured more or less redundant weapon icon, it's GUI could've been made better by streamlining those away (not the spell, icon, though, unless it'd also adopt Skyrim's flashy balls of magical energy in hands approach, which I don't like much, but it has its merits) and hooking their functions in inventory to some other elements, like individual bars (HP, for character screen, Stamina for inventory, Magicka for spellbook).
However, Morrowind HUD had overall less screen footprint and it had two features missing from latter installments. First was the minimap, which was also compass and it generally worked better in this regard than it's successors' GPS/compass bar.
Second, far more important, was magic effects bar:
(lower right, near minimap).
At first glance it was very user unfriendly - a narrow band full of colourful, cryptic icons.
The thing is that after becoming familiar with game, it allowed you to quickly assess, for example what buffs, debuffs and other effects were currently active on your person (including diseases), see what kind of debuff just hit you, or whether some temporary buff has already worn off, without taking up much of the screen and without interrupting your gameplay.
While in both Skyrim and oblivious you'd have to go to menu and click several times to obtain similar information, in Morrowind a quick glance at lower right would do. It didn't identify some effects unambiguously, but it was enough to tell you what kind of effect they were and you could always go into menu when you wanted more detail.
Bottom line is that it's better to have "intrusive" HUD, than to have to go into menus for the same kind of information.
And, speaking of intrusiveness, both Skyrim's and Oblivious' sneak indicators are pretty shit.
As for the bloody screens as alternative to health indicators, I don't consider them actual decline. Sure, the way they are married with people absorbing bullets and shrapnel embedded in their body over few seconds they spend behind a box and use the extra matter to regrow splattered organs, is the epitome of derp, but "immersive" indicators could just as well be used in game with much more hardcore damage model.
The problem with immersive indicators is that they often aren't exact, so their utility depends on many factors, for example, being off by even some-teen percent won't be much of a problem if damage is randomized, as it won't negatively impact your ability to gauge how much more can you take.
Finally, regarding people who completely deny identification with their characters - I consider them a weird bunch, minority of even the monocle gamers and likely in denial.
Reason? Simple - whenever you had a single PC, even in the oldest and monocliest of games, the game referred to this protagonist as "you". I haven't heard of PnP GMs addressing PCs in third person either.