If you did the optional wintahold college quest, you'll know that conjuration master guy turned into a ghost after he hit the soul gem with keening. Kagrenac did something similar but on a larger scale so his whole race became the ghosts seen in morrowind and its expansion, tribunal.

Arniel merely tried to replicate the disappearance of the Dwemer, and he got close but no cigar. If the Dwemer became ghosts, then there'd likely be more than one Dwemer ghost across TES game since Morrowind. And in the expansion, Mournhold, you found ashes in a Dwemer ruin beside weapons and armor and such, so their physical forms somehow were reduced to ash, as compared to Arniel who simply completely disappeared.

The Heart of Lorkhan is much more powerful than a warped soul gem. The dwemer could have gotten a much different result.

Weren't there actual Dwemer ghosts in Morrowind?

Indeed, but they're not named like the dude in the Mournhold ruin that's untouched by anyone until the PC visits it. I just kinda assumed they were casualties from the Chimer/Dwemer war, or had died in some other manner as a result of the various experiments and such the Dwemer did. ><

I know he looks like a ghost, but they call him a shade. So which is he? ...because a shade is far more sinister than a ghost.

Close, but no cigar.

The Dwemer endeavor was to escape the Mundus, which in their worldview is a trap, and return to the first brushstroke of Anu and Padomay, using Numidium as a tool for ascenscion.
Their plan was to reverse the flow of creation. Instead of being many smaller souls, they longed to be one big divine one again.
However, Kagrenac was rushed into completing his project too soon, the armies of the Triune were at the gates.
If he made a mistake or if something else went wrong is unknown, but when he struck the Heart he bound the entire Dwemer race to Numidium, only it did not activate.
Or possibly it did, and the Triune deactivated it before it was fully powered up.

It seems Arniel did indeed succeed in replicating the Dwemer experiments on a much smaller scale.
He uncreated himself and bound his soul to the nearest mythic recepticle, the Dovakhiin.
Were lucky he was only halfway competent, or else he might have bound the entire Breton race to the Dovakhiin.

Consensus holds that Dwemer ghosts are of those that died before Kagrenac's folly.

http://www.imperial-library.info/content/final-report-trebonius

Anyone find that ruin with the orb that drops you inside the mountain? That sphere dropped them into the center of the damn planet i think...i am joking of course. But the dwemer are the coolest mystery in TES. Even in Oblivion i hunted for books and stuff to learn more of them. I yearn to discover more about them