None of my stuff shifted. Then I couldn't move because I had all my stuff plus all the NPCs stuff on me. :shrug:
I didn't really notice it until I changed into a really weak NPC.
Hmm... Should be working. To clarify:
1) Only the stuff you currently have equipped will be archived.
2) That stuff will only be archived if it's (a) non-quest item, and (b ) not scripted. A simple test is to doppelgang some plain shopkeepers (who usually are wearning vanilla clothes). Then shift back and forth and see if the items are being archived.
3) There's a setting that controls morphing equipment. You can set it in the Options Menu (misc inventory, click on options then on Wrye Morph). However, equipment morphing is on by default so that shouldn't be a problem.
4) some npcs carry a bunch of extra stuff. E.g. the towns folks from crowded cities. And guards typically carry a set of street clothes in addition to their armor, so that stuff will pile up after a while.