I was a huge fan of Morrowind. Due to level and especially item scaling in Oblivion, I didn't even buy the game. I did try it, and hence decided against it.
This mod is essential for me to buy Skyrim. I am not going to buy the game before this mod is out. I can't really help out, but I will provide ideas.
You made a wise choice. 50 hours played and 28 dungeons cleared, I've been using bought gear as a mage the entire time, even though buying also is scaled. I haven't met a challenging enemy and I haven't encountered useful loot. Finished up the dragon killing quest a couple hours ago, and got a helmet which is awesome right before entering the final dungeon. First piece of awesome loot, 50 hours into the game and right before I was done with MQ, right before the final battle. That is the only time i've gotten unique loot for my character in dungeons. Useful loot you come by so rarely that you lose all will to go exploring dungeons, especially since the game is easy. I could probably do everything i'm doing now with my mage character completely stripped down. I would need magicka potions sometimes then though, which I don't need at all now.
The game is broken, severely broken. All the people defending the leveling must be playing some obscure way while having a lot of luck at the same time. I haven't met a hard enemy and I haven't found good or unique loot until right before end of main quest.
People talking about linearity from a static mod must be out of their minds. This game has no replay value at all. Each dungeon is as easy and unrewarding as the next, revisiting them is not even thinkable.
I've played like >50 hours of Morrowind each year 6-7 years in a row now, a lot of that vanilla, and it always was unique and certainly not linear. This game feels incredibly linear because everything adapts to you. You could play the game a thousand times and it would feel exactly the same each time, that is what i'd call linear. Static dungeons made Morrowind a joy to replay year after year, and it's never the same.