For a long time Oblivion damage has been reviled in PVP for good reason and regarded as very poor in PVE. Currently there are very few sources of Oblivion Damage in the game and as such, a true Oblivion 'build' is not possible. I have a suggestion that would allow for such a build to exist without it being overpowered in PvP and yet stay viable in PvE. I would like to start out with the two main sets that have Oblivion Damage.
1. Sload's Semblance:
This set got hit pretty hard with the nerf hammer, and it was very much needed, but I do feel that it was nerfed in the wrong way. I think something like this would have been better:
5 Piece Bonus: Damaging an enemy applies Shadow Blight on them. Enemies afflicted with Shadow Blight take 3% of their Max Health as Oblivion Damage every second for 4 seconds. This can deal a maximum of 3000 per tick. This effect cannot stack.
In essence, there would no longer be a cooldown and it could affect as many enemies as you can damage, but by removing the ability of it stacking you eliminate the overpowered situation of groups running it in BG's and Cyrodiil.
2. The other set is Knight Slayer, I think that allowing this to also affect PVE enemies would be enough and no further changes would be needed, but I would buff the maximum amount of damage to about 12k to help it compete with other more 'regular' used sets.
3. Finally, the other main source is of course Oblivion Glyphs, this is where things get a bit complicated as they deal a flat amount of damage, but by changing them to fall in line with the 'Max Health' condition you could make them more appealing in PVE situations. Something like this:
Truly Superb Glyph of Decrease Health
Decrease Health Enchantment
Deals 2% Max Heath as Oblivion Damage
Can deal a maximum 2000 Damage.
To put this in perspective let us look at examples.
1. PVE scenario.
Named Enemy
Health = 2 Million
This would allow the above examples apply their maximum amount of damage. If all of these were equipped, you could make a viable and dedicated Max Health build without it being too overpowered and outplaying more 'meta' builds.
2. PVP scenario
Enemy Player
Health 20k
In this situation, the sets would deal a lot less damage, with Sload's only hitting for 600 every second, Knight Slayer would hit for 1600 and the Glyph proc would hit for 400. Together this is only 2600 damage and would not be overpowered at all. Especially if the suggestion of Sload's not stacking is implemented.
In Summary, I believe there is room for a Max Health damage build, provided that it is handled correctly and that these effects cannot stack.
On another note slightly related, Malacath's Band of Brutality does indeed apply to Oblivion Damage too, incase you were wondering.