Starting Morrowind after playing Skyrim and earlier Oblivian.

Looking at mods, I realize that MCP and MGSO really seems to be the 2 mods that will change the game and also be the only 2 ones you truly need.
Is this correct?

MCP is mandatory. I also like Better Bodies, Texture Fix and Wakim Game Improvement as well as a few other minor but good ones

There are thousands of mods... which ones you use is entirely up to your opinion.
No two people use the same mods, there are so many variations to pick from.

http://www.gamesas.com/index.php?/topic/1060141-mod-recommendations-for-new-players/page__hl__recommendations - info on tools/patches you'll need. Info on how to find mods you want. Lists of other players favourites.
etc.

MCP is only one of the two essential patches. The MPP is also great. (but I believe that MGSO might come with it... But I personally would never use MGSO)

Mmh, mainly MCP and then some content mods like Tamriel Rebuilt. The original game is splendid itself.

As Pluto says, Morrowind Code Patch and Morrowind Patch Project are the only essentials.

Anything other than those two mods are optional.

Well you don't need anything, but the argument for those two is that since they only fix bugs*, you still get a "pure" Morrowind experience, just with less frustrating bugs. Of course I have my own personal list of little improvements I'd never play without given a choice, I'm sure most people do.

On my list:

• Weathered Signs, or some other readable sign mod.
  
• An "herbalism" mod (I use my own Graphic Herbalism).
  
• Key Replacer - So all keys don't look alike.
  
• A nvde mod - Permanent underwear freaks me out, okay?

I would go so far as to say I recommend some of those (like the readable signs) to anybody without reservation. But I would never suggest they're actually essential to play. In fact they're all quite trivial. They're just little touches that make the game a bit more enjoyable (for me).

*Actually Code Patch goes a bit beyond that, but it's modular. You can choose to install only the bug fix parts if you prefer.