Oblivion:Light the Dragonfires

Quick Walkthrough
# Escort Martin to the Imperial Palace.
# Lead Martin, Ocato, and guardsmen outside to combat the Daedra.
# Catch sight of Mehrunes Dagon, and wait for your journal to update.
# Run to the Temple, then watch Martin turn into an avatar of Akatosh and battle Lord Dagon.
# Ocato names you the Champion of Cyrodiil.

Detailed Walkthrough
The Circle Closes
With the Amulet of Kings reclaimed and Martin Septim under safe watch, all that's left to be done is for Martin to relight the Dragonfires in the Temple of the One, resealing the barrier between Tamriel and Oblivion. However, there is still a matter of regal tradition: Martin wants the Elder Council's blessing to be accepted as Emperor without officially being an heir. For one final task, you must escort him to the Imperial Palace to complete the ceremony and end this ordeal at last. Upon arrival, High Chancellor Ocato greets Martin amiably and is about to officially accept him as Emperor when an exhausted and terrified messenger rushes in reporting Oblivion Gates opening inside the Imperial City's walls!

The Jaws of Oblivion
The Daedra and Mythic Dawn have launched a last-ditch effort to achieve victory over the Empire. They have stormed the Imperial City and opened a multitude of Oblivion Gates. No sooner than the messenger stops speaking do Daedra burst through the doors to the council chamber and attack everyone within. With the help of the Palace Guards, the Blades and Ocato, they can be defeated quickly, though this is only the start of the epic battle. If Baurus and Jauffre survived the previous battles, they will aid you in this darkest hour as well. If Baurus is dead, Captain Steffan will take his place.

You would be wise to save the game before you exit the palace, and make any preparations you feel are necessary (repairing weapons and/or armor, making a few potions, healing your allies, etc.) Be warned that Martin is no longer marked as essential, and further, the game is over if he dies. Because he is only wearing the low-defense Emperor Robes, he will make easy prey indeed. It is up to you to protect him. Prior to entering the Imperial City, you could even reverse pick pocket onto him a zero weight mage's hood enchanted with fire-shield which he will don.

Once you have exited the Palace, you will be swarmed by a battalion of Daedra that will likely exhaust some of the help you receive from your companions. It is advisable to stay by Martin at all times, helping him kill whatever Daedra he attacks. If you can, use healing spells on him to keep his health up. If you do not have any, simply quickly killing Daedra will minimize the damage dealt to Martin and help him to survive.

After the Daedra in the Palace District have been dealt with, take a moment to rest and resupply yourself. Repair any broken equipment if you can, and take anything you may need from the bodies of the dead to replace whatever resources you may have used. When you are ready, lead the troops through the door to the Temple District. More Oblivion Gates open, spewing forth more Daedra. Instead of trying to attack them, rush to the right to be greeted by the sight of a group of Guards fighting futilely against a massive, red-skinned, four-armed, demonic creature wearing a spiked gauntlet and wielding an axe... Mehrunes Dagon himself!

The Last Stand
thumb|The Avatar of Lore:Akatosh|Akatosh
The plan has failed. The barriers between Tamriel and Oblivion have already dissolved - lighting the Dragonfires will do nothing now.

As soon as you get the quest update, run back outside the gate and meet Martin. In desperation, he tries rapidly to think of a solution. Mehrunes Dagon, as he explains, is an immortal, and can only be killed by another immortal. No matter how many Guards throw themselves at him, Dagon will never fall. However, from this, and your suggestion about using the Amulet of Kings, he forms a backup plan. He decides that all hope may not be lost, and that Dagon can be defeated - but Martin needs to get inside the Temple first. With both an Oblivion Gate and Dagon blocking the way inside, the only way there is past the Daedric Prince himself. If you can just get Martin inside, he will handle the rest.

There are a variety of ways to get past Dagon. Although you can't harm Dagon by normal means, you can "stagger" him, if you do enough damage in a single attack. The critical amount of damage is set to be one-half of your health (or 50 points if your health is less than 100). If a single attack does more damage than this, then Dagon will stagger backward and be unable to attack for roughly ten seconds, giving you an opportunity to run past. Another option is to count on luck: if Dagon is preoccupied by crushing the Imperial Guards beneath his heel, he may not notice if you simply run past him. Fortifying your Speed will help with this approach. You could also run behind the nearby building, following the outer walls of the district, and slip behind Dagon without him ever seeing you. You may also use an Invisibility spell or Sneak and Chameleon to easily slip past him. The key is to get to the Temple door quickly. Martin will follow, if you get there before your allies are overwhelmed and he is mired in battle.

Whichever option you choose, run inside the Temple with Martin in tow. When he enters, he appears almost relieved, and hurriedly explains his plan: the Amulet of Kings is infused with the Dragon God Akatosh's blood, and as Martin is a part of the Dragonblood, he may be able to use his joined blood, the Amulet, and the power of Akatosh's Temple to summon the power of the Dragon himself. He bids you farewell, gasps a thanks to you for all that you've done, and rushes atop the altar as Dagon smashes through the rooftop. Staring down upon the last Septim, Dagon menaces him, but Martin stands unafraid. Suddenly, beams of light burst forth from Martin as he shatters the Amulet of Kings and transforms into a gigantic, flaming dragon. Dagon and Martin - now the Avatar of Akatosh - clash, the two immortals battling for the fate of Nirn. Finally, Martin swoops down and buries his jaws into Dagon's neck, wounding him, and finishes him off with a breath of holy fire. Dagon falls, his physical form banished and the Oblivion Gates closed. Martin, however, pays the ultimate price for borrowing the power of Akatosh: he turns to stone atop the Temple Altar, an eternal monument to him and his bravery.

Notes
It is possible to keep Baurus and Jauffre alive during this mission, though it does not affect the ending (other than being able to hear their remarks). A good tip is to lure the Daedra over to the guards, to the captains or to Ocato (who is essential) to avoid getting them hurt. After you talk to them, they will both head back to Cloud Ruler Temple.
After this quest, you can receive the Favor of Akatosh blessing from the statue of the Avatar. This blessing fortifies both Personality and Luck for 30 in-game days.
There are actually two Avatar of Akatosh statues in the game world. Besides the one in the Temple of the One cell, the Temple District cell has its own fully-functional version. To reach it, find the window that the tail of the statue sticks out over, then jump on the sill. Look straight up at the tail, jump, and activate the statue at the apex of the jump. The two statues are considered different entities, so their blessings stack and you can get both in the same day.
Dagon has two attacks: swinging his axe and stomping. The axe causes around 50 damage while his stomp can cause over 100. This is quite useful if your Speed is high and there are a lot of daedra chasing you, for it can be fatal for them.
If you have acquired the Staff of Sheogorath from the Shivering Isles expansion pack, you can use it to freeze Mehrunes Dagon, allowing you safe passage past him.
Make sure that when you collect all of your loot, you don't leave anything you want in the street. Anything left behind will disappear once you talk to Chancellor Ocato.
  An achievement will be unlocked after speaking to Ocato.

Bugs
 
One method is use Damage Fatigue or Absorb Fatigue spells, or a weapon enchanted with them. Once Dagon's fatigue is drained (and he doesn't have all that much) he will collapse.
Another is to use the Wabbajack on Dagon, if you have it. It won't affect his appearance, but it will change his stats into something much easier to kill. This was supposed to be impossible, but the scripting on the Wabbajack to prevent it working on Mehrunes Dagon is faulty.
A third option is to use Spell Stacking. By alternating between two different Weakness To Magic spells, you can inflict Dagon with exponentially increasing weakness, eventually reaching the point where a magical attack one-shots him.
The   console command will also kill Dagon, which is not a bug, but still leads to the bugged death non-animation.
 
 
 

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