If you haven’t checked out OpenMW already, definitely do so. It’s a replacement engine that doesn’t impact the gameplay, but does add features that the original lacks, even with MGE and the Code Patch, and greatly improves performance and stability. Their distant land implementation is so well optimized that the last time I played I could set the draw distance arbitrarily far with minimal performance impact. The latest release also added support for some very well done and appropriately atmospheric shaders, such as one that adds gorgeous volumetric fog.
Skywind is also making headway and seems to be made by people who really got Morrowind. When it releases in who knows how many years, it should provide a version of the game with more dynamic gameplay, but the same world faithfully recreated.