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Probably because they didn't program the minor NPCs talking about him. You gotta think outside of the game, how they'd be if you were actually there. Not just what happens in the game.
I like the idea but, Sovngarde is generally for the nords. And most people (like me) didn't pick a nord(or didn't play oblivion in the first place) so wouldn't they want to be in their races version of Sovngarde over the nords version?