You really have no clue what role playing involves then. There is nothing in Morrowind that makes it a better RPG than Oblivion. Once you have played though Morrowind a few times it just a boring clunky game with dated graphics. Once you have played Morrowind for as long as I have, then you will be qualified to compare the games. After a couple thousand hours playing both, I prefer Oblvivion of the two, however Beth's best RPG is FO-3, which is showing the direction that Beth is moving in for its subsequent games.
You see, you're still focusing on the graphics and combat, which don't matter.
The point I'm trying to make is that Morrowind and Oblivion fit into two different genres that appeal to two different types of people for different reasons.
If you like action and graphics and physics engines, you prefer Oblivion.
If you like deep lore, and slow-paced gameplay, and the freedom to do whatever you want and deal with the consequences, you prefer Morrowind.
The thing about FO3 is that it was an improvement as far as world design and choices and little things like that. But it still doesn't give the feeling of a deep, alive world with a real culture like the old RPGs of the 90's do. It just makes a world that gives a shallow illusion of being immersive because of the good graphics.
Do you see what I'm saying? If you think role playing involves fun, smooth combat and good graphics, then you are wrong. What you prefer is action games, you've just been confused by Bethesda, who have been trying to combine action with roleplaying. Incidentally, they have attracted two different fanbases who want two drastically different things and one side is going to be disappointed.
From the things you describe as important, which are things I couldn't care less about (graphics, physics engine, combat, stealth system), you really seem to be a fan of action-RPGs, which is why you found Morrowind boring. Because it's a straight-up RPG that downplays combat. So, our debate is over because it's gonna just start going in circles.
Now, I'd really like to hear from someone who is really into classic, non-action RPGs, and prefers Oblivion over Morrowind.
EDIT: @EzDC:
Yes, there we go. Choices and consequences, that's what RPGs are about. You're right Fallout 3 was pretty fun because of that. But, here's the thing:
I just started playing Fallout 1. I'm on my first dungeon and it's already way deeper than Fallout 3, I've noticed. I actually have to problem-solve and ask questions and search around to find out what to do next, not just follow a marker.
In Oblivion and Fallout 3, even if you choose to ignore the marker, there's no other way to find out where to go. Because people don't give you directions and they barely have any dialogue outside the "thank you for helping me" quest confirmation nonsense. So much more in the spirit of action games, which are immediately rewarding, as opposed to RPGs, which are supposed to reward curiosity and exploration and thinking outside the box.
Another thing Fallout does is it combines spoken dialogue and text dialogue. So the main quest is spoken, but there's still room for all that world lore and rumors and other cool little details that are absent in modern RPGs, which are way too focused on action and fighting.