
Regarding Jauffre losing the Amulet of Kings: in the original main plot, Ocato would have been Mankar Camoran in disguise, the player would have given him the Amulet, and he would have run off with it
In FilmDeg Miniatures' 10-hour interviews (link has timestamp), Kurt Kuhlmann, the quest designer for the final iteration of the main quest, claims that in Ken Rolston's original main quest, the player would have given the Amulet of Kings to Ocato instead of Jauffre, but Ocato would have been Mankar Camoran in disguise and that was how the player would lose the Amulet of Kings.
I think this makes Jauffre losing the Amulet of Kings more understandable from a writing perspective. Kuhlmann explains that it would be too cheap and out-of-the-blue for Ocato to betray the player, but if it was foreshadowed, the "decision" to give him the Amulet would be forced on the player. So, he changed it to the player handing the Amulet to Jauffre in good faith, since Jauffre is not evil and intends to keep the Amulet of Kings safe. It's just that the plot requires the bad guys to get the Amulet of Kings, so Jauffre ends up being horribly incompetent.
I know that it's been 20 years since the release of Oblivion, and Kuhlmann may just be remembering things wrong, but I opened up the Construction Set and there is some evidence that supports Ocato actually being Mankar Camoran, or being evil at the very least. Ocato has his own "Combat Style", which is unusual, considering most NPCs just use a shared default combat style, and unique combat styles are for boss NPCs like Mehrunes Dagon, Jyggalag, or Mankar Camoran. This implies that you were supposed to fight Ocato at some point.
So maybe Kuhlmann is right about the original main plot. On one hand, the High Elf chancellor who holds the same position as Jagar Tharn secretly being evil would have been incredibly predictable. Kuhlmann says he gave Mankar Camoran the motive of creating Paradise in order to make him a better villain. But if the main quest had really leaned into "evil High Elf doing evil because he's evil", maybe it would have been so over-the-top it would have been funny?