Well, I wish you good luck with this mod, though seeing as how this mod has already been abandoned three times, I'm not putting my hopes up.
This is not an easy project, and if you, as project leaders, don't mod it, nobody will. I've seen hundreds of projects like this both in and outside of the Oblivion community and as far as I can remember, very few ever made it anywhere. Even fewer were completed, with only several glitches needing to be fixed.
My suggestion, you need a good plan and you need to know how to use most of the stuff the Construction Set can do. If you look at what approach my team took with our mod, we first decided what things we would put in the mod for the first public release. We decided to drop most quests, most cities of Vvardenfell, and almost all Vvardenfell dungeons. We decided to drop many stuff of Mournhold, while focusing on Solstheim.
We then made a list of specific objectives, each one having a percentage of how much of it has been done. (*see my topic in this forum) This helps us keep track of everything that needs doing and makes our work more organized. It also helps the public know what we're doing and how fast. We have updated this list with new objectives during development time, but only stuff we were sure we could accomplish. Like recently, when we decided to add a Mana Burn spell. Sometimes we split a single objective into more specific objectives.
We lacked many models, so we settled either for stuff that looked somewhat similar from what's available in the game or in modder's resources. They're not permanent, if someone comes along and makes a model, we will remove these placeholders. I'm not sure how many new models you're planning to add, but you could consider this to speed up development.
You should decide what the gameplay will be like. Will you add level scaling in this region as well? Will you add "essential" characters or "quest" items? Will you add, I dunno, stuff like graverobbing, Mana Burn or simply stick to what Cyrodiil had to offer? Whatever you add, your team needs to be consistent. It doesn't make sense to make one important NPC unkillable but not another equally important NPC. If you add essential NPCs, you should consider removing that tag once the quest has been completed. I think you shouldn't add any essential NPCs but that's me. Most people here don't like not being able to kill everyone, but you should add a ton of new spells, since it's the land of the Altmer.
Before you start working on the .esp/.esm, you should have a completed heightmap. Then you should split it into regions, including seas, name them, give them ambiental sounds like birds, insects and other sounds and decide the climate for each region. If you want the same climate everywhere, it's best to edit the climate of the entire worldspace instead of each region. You should also set up a square border around the isles, so players don't get too far from shores. Make sure all the "sea" cells the players will ever see are put into a region. Any region. If they're not in any region, the players will not see water there, just a giant empty square pit.
Right, now it's time to decorate the islands and seas with rocks, trees, sand and other stuff. Rather than trying to manually add every single rock and tree, which was almost impossible and inefficient even for the game developers, use the region editor to generate content for the new region. Best to make it so that it randomly places creatures and creature spawn locations as well. You can edit if afterwards and remove stuff you don't want.
Next you should generate pathgrids. This helps characters and creature move around much easier without bumping in trees all the time.
Dungeons cannot be generated, so you'll need to make them manually. Dungeons also need pathgrids and they need to be manually placed as well. You can't automatically generate interior pathgrids.
Now it will be time to make cities and villages. Make sure the law enforcement works. The Altmer guards will need their own dialog and you'll need to make working jails as well. Each time you edit a cell, don't forget to update the pathgrid you generated, otherwise you might see NPCs bumping into their houses trying to get to their destination. Makes sure the players have a way to get there by boat or by magic.
And finally, add quests. Best to make them more challenging than the vanilla ones and the journal should just record game events from a 1st person perspective, not tell players what to do.
Of course, these are just my suggestions. Feel free to do it another way.