Yep, this is it; a great game to play.

(based on Steam's demo) Kingdoms of Amalur: Reckoning
It has an open world, character creation, a setting that isn't too dissimilar to the Elder Scrolls universe and is a 3D action RPG.

Divinity II would ALMOST fits all of your criteria. It allows you to create your character, you only get powerful weapons/armor if you do a lot of exploring and there are enemies MUCH stronger than you when you start the game. Unfortunately it's zone based open world and you unlock new zones by doing the main story, although each zone is about the size of one of GTA 3's districts, so there is plenty of exploring to do per zone.

The Memory of Eldurim would seem to to meet all of your requirements BUT I haven't tried it, and it's still in Early Access.

Thanks for the info and recommendations. Still keeping in mind all of them.

The common thing that I find in most of the games, is that you get geared up pretty fast. It would be better if you just could use a basic sword (even a wooden stick lol) and no armor when beginning, and being limited as far as capacities go. And then, through the course of the game, make steady slow progresses. That's the really the feature I wish I could find, but it seems hard lol

Real life! Oh wait, character creation :P Would you settle for character customization?

Mount and Blade : Warband seems like a good fit though. Otherwise, if you don't mind the different perspective, then Arcanum.

In both games it can be real struggle to become a strong character, especially in Arcanum which is particularly brutal in the beginning. It does lack any real character creation though, at least on the cosmetic side. Also, it's skill system is a bit on the strange side, with some weird tech vs magic affair.

And, is Mount and Blade open world in an Oblivion/Skyrim sort of way by chance?

Uhm, kinda. It's more open world in a Fallout1&2 sort of way. You are presented with a big world map in which you can go wherever you want and visit various points of interest. Points of interest include villages, towns, castles and hideouts. The map isn't static, and has many groups actively moving around including cattle, trade caravans, bandits, lords with their soldiers and entire war parties. The game only swtiches to third person when you visit/attack a point of interest, or when you decide to engage a party on the map.

It's different from both Oblivion/Skyrim and Fallout1&2 in that there is no story. You make your own. You can try to become a trusted marshall of a king and command his troops in battle, become a bandit, become a wealthy business owner, or try to create your own kingdom. Also, the world is dynamic even if you don't do anything. Wars can come and go, allegiances shift all over the place, lords thrown in prison or even entire kingdoms annihilated, all while you have a merry time travelling from town to town trading your wares and fighting in tournaments.

edit: then there is also the massive modding scene, with several complete overhaul mods if you want a different, possibly fantasy/sci-fi, vibe. Unfortunately I don't know much about the mods, but it really does seem like several are incredibly good.

Hello & Welcome to gog.com :)

You might want to take a look at the two Saints Rows here. The Third might be closer to your skill limitations since its XP (or Respect as its called there) point buy rather than unlocks at side and main missions in SR2; SR2 on the other hand is more serious in in main story and faaaar bigger. Both cool in their own ways.

but saints row is gun based, and I actually prefer something with swords and armor. Thanks anyway for this recommendation

True... Mostly. You have Katanas in SR2 and a special Sword unlock in SR3 but its mostly gunning down... or driving over. Or both. And then you call a heli and missle it down if it has really annoyed you :D