The year abroad at Oxford isn't officially compulsory, but everyone goes. It's been assumed all year that I'm going to have one. And anyway, whether or not it's compulsory is pretty irrelevant, because the only people who don't go are the ones who didn't want to anyway, so it makes no difference to anyone who does want the year abroad. It is quite literary, although my perception is skewed by doing an ab initio language. Half of my papers this year are language papers though, so it's not as if you'll be doing only literature. In FHS I can do things like European Cinema, Catalan, some weird history type paper, linguistics and some other stuff. French and German have wider options. The main content is literature, there's no getting away from that, but you can do other stuff around it. And you get oral classes in the FHS. As it is I have two translation classes and one grammar class with a native. I would have double that if I did two post A level classes but Russian is basically all grammar at this point. There are no oral classes in the first year for Spanish, but French (and probably German) does them. They used to do classes for Spanish but no-one really went to them, so take from that what you will.
I'm not sure that I'd agree that the course is old fashioned. My Spanish has definitely improved. One of the set texts is less than ten years old, and two of the others are modern era, so it's not all old texts. And then if you do the old texts you learn some of the history as well anyway (like with the medieval ballads). If you don't like literature you won't like Oxford, but you're going to have content in the language and it may as well be great literature. The degree is about more than simply learning to speak the language, you can work on that during the year abroad or on holidays in the summer far better than at either uni.
And I know you've already picked, but other people will read this.