Yes, immortal essential NPCs were a result of criticism of Morrowind. I honestly don't see it as a bad thing. Killing essential NPCs can really screw your game and if you haven't saved in a while it can be frustrating. Hell, some players didn't realize that they had killed an essential NPC until later in the game when they decided to finally try the main quest.
It was just to make Oblivion more forgiving to players' mistakes and also as a countermeasure to malfunction of the "radiant AI". Imagine killing the emperor by accident at the starting area then getting slaughtered by the blades. That would gave players a bad first impression of the game.
As for other criticism of Morrowind when Oblivion was announced. Well, these forums were very lively at least
. People complained about how NPCs stood in one place all the time, how there was no way to apologize to NPCs if they attacked them by accident, about the dice roll "hit or miss" combat system, about lack of useful or accurate directions to quest objectives just to name a few. They even complained about the lack of toilets around Vvardenfell!