Lol, let's not make this into another wizards v. muggles fight.

I agree with everyone else in that that later books already show a generally oppressive government. If you want something more oppressive than there is no need for potions in the water supply.

Firstly, if you take for granted that the Wizengamot is both the judicial and legislative bodies of the wizarding government and that only pure-bloods and full-bloods can get on the Wizengamot than you have an obviously corrupt and oppressive system right there.

Again of the pure-blood kick, you could make it somewhat like in Jim Butcher's Codex Alera series where only people with old, powerful lineage get citizenship (in your case the purebloods). If a non-citizen were to so much as spit at a citizen than that non-citizen could be tried. Also a citizen is able to challenge a non-citizen to a duel to the death for such a crime (or maybe even for nothing at all. It has been a while since I read the fourth book).

There is also the use of dementors to consider. There are tons of interesting ways that dementors could be used to oppress the masses. You can probably think up more than I.

Also, if there was truly an oppressive government than Dumbledore would no longer be at Hogwarts, as he would never allow for such a Gv't. Therefore, Hogwarts would most likely be utterly different. Maybe it would just be for the pure bloods. Maybe everyone would go there but the non-citizens (if you go with my above idea) would be packed into communal type living arrangements with sub-par health, food, and education standards while the pure-bloods and full-bloods would get their choice of where to sleep, would get gourmet food, and would get nearly one on one education.

Though I don't know where you are going with this (Did this oppressive government come about due to a coup or was it a complete AU long held tradition?) I need to know more before you can shoot ideas off me.