As a player, or a modder?
As a player, you make sure the grass mod(s) are checked in your list, open up MGE and create distant land. When that's done, *UNcheck* the grass mod(s) and then play. You should have grass which sways as if in the wind.
If you leave the .esp files checked during play, they will have collision and you won't be able to walk through the grass.
Vality7 and Vurt have great grass mods.
As a modder, I wouldn't have a clue; I don't even know what you are asking.
Elaura's right, if you want to play with animated grass. But if you want to make MGE think some mesh is "grass," and thus render it swaying in the wind, you would use a statics override list. You do not need to edit the mesh in Nifskope or anything too difficult.
Open up MGE, go to the Tools tab and open the Distant Land file creation wizard. Select your plugins like normal and make sure the plugin that includes the mesh in question is checked. (For stock meshes, that's Morrowind.esm.) Then skip Landscape textures and Landscape meshes so you are on the Statics step. Set your statics parameters to whatever you like, I don't think it matters, and then click
Export list of statics and name it and then save it. That will make a statics override list. Open the list with Notepad or some other text editor (I prefer Notepad++) and find your mesh. You'll probably have to search for it, there's lots of meshes.
Once you've found your mesh, change whatever is after the = sign into "grass" like below.
d\ex_somemesh.nif=nearbecomesd\ex_somemesh.nif=grass
Now save that override list, and add it into MGE's list of... lists in the Statics tab click and click Create Statics. Just remember to
remove the mesh from the game somehow, or it will still be rendered by both Morrowind and MGE at the same time.
[edit] I should probably mention that you need to set the
Grass density setting to 100%. If it's less than 100%, then there's a chance MGE will skip creating the mesh since it can't discern between actual grass and your mesh. If you don't want to use 100% grass and you don't see your mesh, just generate statics again until it does appear.