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I've read similar things about the development of Morrowind, about creative decisions needing to get past Todd, in this excellent article about its development.
Here are some quotes from Michael Kirkbride:
The game was originally set in the Summerset Isles. And then we got bored and decided, “Man, this is really boring. How about we put it in a volcano with like giant bugs everywhere?” And people were like, “What?” So Todd Howard — the easiest way to get anything past Todd, at that time, was you basically just had to say “Star Wars.” Which was true for me and anybody then. So I was like, “The game should be like Dark Crystal meets Star Wars.” And he was immediately hooked. I got all the bug creatures I ever needed, we moved it from Summerset Isles to this weird dark-elf place on the map, and we just went from there.
I used to have this thing with Todd, because he was one of the ones that’s like, “Let’s not make it too weird.” So I’d bamboozle him. There was a period where I would actually draw two different versions of a monster — the one that was weird and that I wanted to be in the game, and then one that was fucking crazy. And so I’d go to Todd, and I’m like, “OK, I think I’ve got the mid-level creature set.” And I’d show him a picture. He’d be like, “Nah, dude, that’s crazy.” Then I’d go back to my office and I would act like I was drawing something new, and I’d just come back with the original drawing of what I really wanted to be in there. Like, “Hey, is this what you were thinking?” And he’d be all, “Oh, yeah, that’s much better. That’s great.”
I can definitely believe his influence has become immense following the studio's success - though it definitely feels like he needs to hand the reins over to somebody else.
