According to the Morrowind Scripting for Dummies, iCrimeThreshold sets the crime level over which NPCs react to you negatively. Its default value is 1000.
I've checked in the CS and it appears that the death penalty threshold is not governed by a game setting, but is set from dialog instead. You'll find the death penalty dialog greeting under Greeting 0, its info ID is 58028831233554797. It has the condition PCCrimeLevel >= 5000, changing this will likely get you the results you desire.