I'm definitely not an expert, but I have spent my fair share of time messing with MGE XE. Just to offer my 2 cents... The only things I can think of that would hinder performance on the level you describe (besides incompatibilities or some egregious install error) would be that you have either A) checked the grass to load in the Data Files launcher for the game or B ) you have selected multiple versions of grass for distant land, effectively rendering grass twice. For the former, simply uncheck them. For the latter, make sure you only use one instance of grass for each region/grass area. If that's not it, recheck your settings again, and then once more. I've re-generated distant land at least 30 times so far, and I'm not done tweaking it.
Also, my problems seem to not be remedied by any other fixes, and I'm under the assumption that my processor may simply not be able to handle the extremes of MGE. I have a quad core, but it runs at 3.0ghz, which is pretty close to yours. However, I do not get 10 second stutters..
Try disabling the most resource-intensive shaders, check boxes, etc. If you can't run MGE at the lowest settings absolutely possible, it may be a problem with the version compatibility for you. It also helped me to run MGE, but disable distant land, just to make sure the shaders and MGE itself works ok.
I hope something up there helps you. I know how frustrating it is to be so close to playing a beautiful Morrowind, but being stuck on the last part