EDIT: Still trying to figure out that white dot issue with the textures. I had a bit to much to drink last night and didn't try very hard to fix them as a result. :whistling:
If I remember correctly, there is an issue with Morrowind's larger meshes where they aren't exactly modeled correctly. The game can't keep track of the precision needed to handle the gigantic, low-poly Vivec cantons. I have seen this problem in my game, too, and it happens with any textures I've used.
Anti-aliasing will also make this much more apparent, for me it's annoying to the point where I avoid Vivec with anti-aliasing. :facepalm: