Yeah I would try the card with the 1Gb ram, maybe a little slower but the more ram you have when dealing with large textures the better. The card itself surpasses recommended specs as it came out after the game was released.

It needs all this ram because if you have less you will get texture streaming problems like stuttering and pop in while the buffer refills. So the 1Gb there is a lot more space (buffer) to fill so it can stream the textures out onto your screen while it is being refilled constantly works better. Kind of like a queue really. If you have a bit more system ram lying about somewhere I would stick that in also

Only thing is.. the 9500 gt is DDR2, the 9600gt is DDR3 - is there any main difference that may cause problems?

Of course, I'll have to wait for this machine to arrive before I can do any testing, but once it is I will pop the 9500gt in and see how it works out.

You should be ok with it being DDR2, like I said textures require more system and video ram than anything else. More is better in a literal sense. That system there you have mentioned passes the games recommended specs. I played it on an Athlon XP, 1 GB Ram and a XFX 6600 GT AGP when it was released in 2006, ran a few mods on it with that card also in medium to high setting and 1024x768. Granted Quarl wasnt out at that time but there was better wildlife, flora and water etc.

Recommended specs :

http://www.uesp.net/wiki/Oblivion:System_Requirements