ES4: Shivering Isles - Interview @ Planet Scrolls

Planet Scrolls has the latest Pete Hines interview, discussing Shivering Isles.  Here's a bit that indicates Bethsoft is quite happy with the scaling system:

We know the Shivering Isles will be leveled to your characters level, does this mean that there will be completely different creatures at lower levels that the ones you see at higher levels? For example: at level one in Cyrodiil, if you enter a goblin cave, you will have "goblins" and "goblin skirmishers" but if you enter at a higher level you will have "goblin warlords" and such. So to get the most out of the expansion, should you play it at different levels and not just finish it by level 10?

Yes, creatures work much the same way they do in Oblivion with some small modifications. If you're creating a game, or an expansion, where you allow anyone to go anywhere they want you have to let the game adjust for that otherwise it's way too hard for some folks and way too easy for the others. Ideally you should pick a character that you enjoy and feel is suited for the challenge Sheogorath is going to lay before you and have at it. Whether you're at level 5 or 25, you're going to have fun. That being said, it is our assumption that someone playing Shivering Isles has played a great deal of Oblivion, so the content takes that into consideration.