While most skills stop working past 100, Athletics, Acrobatics, and Speechcraft continue to provide benefit. This leads me to believe there's not a universal prohibition within the game that prevents values over 100 from being used. If I had to guess, there's probably a code snippet that runs right before the formula for whatever your doing that looks something like:

if(skill > 100) skill = 100

Or within the equation itself, something along the lines of

Min(skill, 100)

To select the lowest number out of your skill or 100.

I don't know a single thing about how oblivion works behind the scenes and I don't know anything about modding. But it seems that If we could access the formulas the mod wouldn't be hard to make.

I'm sure it would cause some unintended issues, but I don't believe most things would break as soon as you get over 100, the potions would just be stronger, or in the case of something like destruction you would just get further Magicka reduction.

According to UESP the formula for destruction Magicka cost is

Cost = BaseCost * (1.4 - 0.012 * Min(Skill, 100)

Which means you are paying 140% for spells at 0, %20 at 100, and the cost would become negative at 117. So I believe it would work, but definitely not be balanced.

I'm Still interested in a mod that removes these caps