To tackle particulars first,
Taking away health or items would punish players (who would think it was unfair and justly so)
Why is such a thing unfair? Is having to exchange gold for a new weapon at a shop unfair to players? Fast travel, as it is currently defined, is the instant simulation of having moved from point A to point B. And based on this definition, there are inherent costs of moving from point A to point B. Whether those costs are in gold for transport or health for risking the journey alone based on precalculated conditions, that is the natural outcome of the system those players are using.
Interrupting players would make for a very annoying experience (people fast travel to avoid danger and interruptions so that they can get back to playing the game)
Same as above, it's only another representation of the inherent costs of moving from point A to Point B. The only difference between the above and this is that the above even simulates the actual combat for you. I can understand not wanting interrupts, but if one representation is denied, surely the other is a necessity?
Having to be at a place at a certain time makes for an interesting quest objective that is optional but if it was a transportation object or town I would hate to wait, and load the screen, and then wait, for the NPC who runs the transport to walk over, and wait, while the screen loads again for the next area. (If you remember zelda used this for Hyrule castle it was just annoying/discouraging when you would run right up to it in the distance and it closes up on you.)
And yet I see little to no difference in this example from the basic premise of Fast Travel in general. All you have to do is instantly fast-forward time to access the opportunity to instantly fast-forward space. The problem of Zelda as an example was that, more often than not, you had to wait the entire night for those gates to reopen. Here, that is not the case. And if the only legitimate stab at this particular representation is that it requires two instant-fast-forwards instead of one, I can't help but wonder how much time that realistically would add. Probably on the order of a few seconds, assuming scheduling not being as hit-and-miss as in Oblivion.
Mark and recall basically lead to the system we have now. where you need to mark your location that you have already been and then when you are ready recall to that location which according to the Devs they are trying to get rid of menu interface that bogs down gameplay.
Mark and recall as I described it implies a constant limit that is not present now. It would be akin to picking 4 or 5 or so favorite locations, marking them as "home" locations, and limiting fast travel only to those locations until they are redefined (actual numbers are open to negotiation). That is a remarkably different system with remarkably different implications for how one plays the game.
As for the menu system, the insinuation I'm hearing is that mark and recall inherently bogs down menus. I propose than any mechanic can be given an artfully designed and minimalistic travel system. In fact, a system that limits how many places you can travel to at a time would by definition be more minimalistic, as the on-screen options they would have to display would be 4 to 5 destinations versus potentially 100+ destinations.
Taking away instant travel will take me out of the experience especially if I have to walk all the way over to a place on the other side of the map forget to save and Die and then have to do the same thing over again (this is the type of thing that makes me set games down and not finish them)
I must admit I find it odd that you describe the removal of FT to take you out of the experience, particularly because that is what FT is designed exactly to do. It takes you literally outside of the experience through a black screen or loading screen and deposits you back in the experience in a disjoint manner, like an audio player skipping portions of an audio track. Saving is another issue entirely; it's always up to the player regardless of the system to ensure their saving habits are healthy.
Now, onto the more esoteric things,
find nothing wrong with change. It is a good thing BUT change that goes backwards or creates unneeded annoyance is something that I really don't want. ... It needs to feel fluid and fun otherwise people will hate it. Like I have said in my post before having to pay to go somewhere is stupid if you already have the current fast travel system in place. The morrowind system would be a step backwards not forwards at this point. If people like that system better then they can mod the game on PC or otherwise walk/ride everywhere.
If you have a way to reward people for fast traveling in your way then we might agree on something that might be interesting(special quests/new equipment/Gold and riches) . I don't play video games to have realistic experiences I play them to have fun this is the core of gamers.
The trouble with using phrases like "backwards" or "forwards" or "unneeded annoyance" or "fun", is that all those phrases are purely subjective. For the sake of argument, I won't try to argue that many gamers are actually open to interpretation so long as a particular system they find limiting works well and cohesively within a world and a larger system of mechanics. Instead, let's just assume that it is certain that the majority of gamers right now do in fact prefer nonlimited and nonpunishing fast travel to any other alternative in the infinite sea of alternatives and overarching mechanics systems that could possibly be proposed.
That premise accepted, I would caution defining such subjective phrases concretely, even if it is not the intention. While Morrowind's system may be backwards to some or even hypothetically most, it is by no means guaranteed to be backwards to anyone else. And whatever might constitute as forwards for some or even most is by no means guaranteed to be forwards to anyone else. Fun in particular falls under the same caveat, along with annoying. Some don't find it fun to have limitations, artificial or in-game. Some define their playstyles by it. Perhaps believability doesn't way too heavily on your experience of fun in the game. For others, it plays more or entirely into their experience of fun, depending on where they are in the gradient.
The only thing I would really have to say about the rejection of limiting systems is that the only thing holding current FT in the limelight is the assumed premise that the majority of the gaming audience will refuse any form of limitation, ever, because it threatens the assumed common definition of "fun." The thorn to this issue is that there never has been and never will be a common definition of fun. Is there a majority definition at this moment that defines travel limitations in any form as not fun? For the sake of argument, sure. But if, in the future, that majority definition ever shifts, whether it be towards limitation or towards something entirely different, will those who held optionality as their flag of "fun fast travel" be seen by the new standard-bearers as cluttering up discussions with their poiontless hopes, trying to re-marshal support for a system that surely is nothing more than an absolute step backwards?
The limits of the majority is the whims of the majority itself.
Do I have a suggestion that I think will unite the majority of the current majority and minority? No, sadly.
Do I think that both sides need to recognize a bit of give-and-take to come to a more perfect system. Absolutely.