Is it possible to stop monster respawns in Oblivion

The only "leveling problem" with Oblivion is if your chosen class focusses solely on "soft skills" that are nigh useless in combat, such as Security, Speechcraft, Mercantile, etc. and has no damage dealing primary skills. If so, then you can easily end up leveling up using lockpicks, conversations, and haggling, while your combat skills stay low. Since the game adjusts the levels of your enemies according to your level (which does not necessarily reflect your strength in combat) you may end up to weak to beat them.

However, since you can adjust the difficulty settings anytime this is not really that much of a problem. Also, you can even use this mechanic to your advantage by raising only non-primary combat skills. Hence, your level (and the level of your enemies) will stay low while your strength in combat rises. This will make the game even more easy.

Having said that, I of course suggest to stop worrying about such issues and to use the "play as you like" leveling system to maximize your fun, not your stats. To this end, any moderately balanced character will do quite fine.

OOO doesn't take away anything from the "vanilla" experience, if anything, it adds a lot, plus fixes some of the broken mechanics (like level-upping the NPCs according to the user level - playing "vanilla", I finished the Arena at level 3, which is ridiculous), while adding some cool new features, like quests and factions and a lot of other stuff which I can't recall right now (it's been a while since I last played it). The one thing is that it makes Oblivion more difficult... Which isn't a bad thing since, like I said, I finished the Arena at level 3...

Either way, I'm of the opinion that OOO, along with the Unofficial Oblivion Patch and the Uncompressed Textures make TES: Oblivion a much better game, both gameplay-wise and graphically.

To quote Raven Dreamer:

Don't forget the unofficial oblivion patch supplemental. The UOP introduces a major bug regarding the Fort Sutch Oblivion Gate, but the supplemental fixes this, among other things

So, yes, I recommend starting with OOO and just forgetting about vanilla Oblivion.