The idea is to bring a whole new challenge to the game, or just a new roleplaying option -- you start out as a monk who's taken a vow not to kill. The god you worship (I haven't figured out which one yet -- I'm open to suggestions) takes this vow seriously and always watches you.
If you go through the game without killing, you're rewarded each time you level with helpful spells/attributes to aid you on your mission. The rewards will be small at first. I had ideas for spells like mass demoralize, mass calm, etc. as you get to higher levels, and a big reward if you finish the main quest without bloodshed. I still have to work those out, so I'm open to suggestions.
If you do kill, you're cursed (haven't decided how yet), and stripped of the blessings you gained, with no chance to gain your god's favor again. I planned on making two versions: normal mode, where only killing NPCs counts, and hardcoe mode where you can't kill creatures either. I'd suggest playing it with Animal Realism to make your pacifist character's trip through Morrowind not totally svck.
I've already written the godwatching scripts. They require MWSE due to the advanced npc referencing features. I decided to polish them up and test them, and they work pretty well. There's only one problem: hardcoe mode means all creatures, including undead and daedra. There's no way to check creature type, so it's a blanket ban on killing them, even though those types don't count as "living."
I'd love to figure out a way to banish undead/daedra instead, but again -- can't check for creature type. Scripting individual creatures would mess with too many mods (and modded creatures wouldn't work). Scripting to check for individual creature IDs is not worth the effort (especially because modded creatures wouldn't work). So, moving on ...
The ban also extends to companions, but only creature companions. The original idea was, you're responsible for your pet's behavior. Since NPC followers are "sentient," they're responsible for their own behavior. Sure, you could just sign people up to do all your killing for you, but if you're roleplaying a pacifist, you wouldn't be a hypocrite, would you? Actually, I'd like people's thoughts on that. It's easy enough to change the script to ban NPC followers from killing as well. Maybe I'll extend the ban for hardcoe mode.
You are allowed hand-to-hand combat. I've already written the script to check for a target's fatigue and modify their behavior if you knock them out. Weak opponents will fold and stop fighting. NPCs/creatures with high willpower won't give up fighting, and bullheaded opponents (high strength), you'll need to knock down a few times to get them to stop coming at you. The more you knock them down, the lower an npc's disposition gets. Casting calm remains the better option, but the hand-to-hand option is there if you're in a tight spot with low magicka. I know it makes more sense for them to flee if you beat them down, but there's problems with Get/Mod/SetFlee. For one, the bloody combat music never stops, and for another, if there's more than one actor with the same ID (like ALL the creatures), it sets flee for all of them. I find a demoralize spell works better anyway (tried scripting one on the target -- no go).
What remains to be done is making it possible to finish the main quest without killing anyone. For example, this may require you to trick quest NPCs into thinking you've killed whoever they want killed. I wouldn't bother altering faction quests like the Morag Tong or Fighter's Guild, but I would make pacifist options for the Temple and Imperial Cult. If you're roleplaying as a pacifist, it means your options are limited, which means not joining violent factions. I haven't decided if I should extend the no-kill option to the Great Houses or not. I'd love to hear people's opinions on that.
So, finishing the main quest ... I agonized over changing the battle with Dagoth Ur. Should I make a no-kill option? Even if I do, I don't think I'll give a penalty for destroying him the original way. He's beyond mortal morality.
Again, I'm flip-flopping between finishing this mod or not. I planned on retiring from modding altogether because I don't have much spare time, but I might work on this after I finish revising my novel. I'd love to hear people's thoughts, particularly on modifying original quests, possible new quests, and rewards.