Daggerfall's graphics aren't particularly bad. They're a tad pixellated but have a great deal of character. Your only real concern would probably be how unstable the engine is - even with all the patches (official and unofficial), you will find yourself at times falling through the world or getting stuck on complex geometry. Indoors also have sluggish performance. Hopefully all this will be remedied once Lucius finishes his masterpiece, http://daggerxl.50.wordpress.com.
The gameplay shouldn't feel "old" for you, as it basically uses the same character system Morrowind does - an even more advanced version actually, as there are many more skills to choose from and a very in-depth http://uesp.net/wiki/File%3a%44F_Custom_Class_Creation.jpg.
You can find a bunch of screenshots on http://www.mobygames.com/game/dos/elder-scrolls-daggerfall/screenshots, and there's currently a thread going on http://www.gamesas.com/bgsforums/index.php?showtopic=1016352&hl=screenshots where people are posting images of their characters (Daggerfall offers a plethora of clothing options, in a plethora of colors - it's ridiculous).
Since you are a Morrowind player, you shouldn't find the game an awfully jarring change of pace, but be sure to save often and in multiple slots, as the dangers are many (both in-game and enginewise). The game's free now, so you don't have much to lose. I'd recommend
every Elder Scrolls fan try this masterpiece at least once in their lifetime - it's an experience like no other!