I can't even imagine Morrowind for the PSP, mabye when the next gen of hand helds comes around, but they'll probably be done with Oblivion entirely by the time that happens, and with it being canceled I don't see anything happening really. Sorry bro, lifes a bummer :shrug: . I always wanted Monster Hunter 2 to release in the US, now I have to buy a freaking Wii if I want to play my favorite game... :swear: So yeah I feel your pain.
I can imagine Morrowind on the PSP. In fact I have and I love it. It can certainly handle it, not in it's original form, but optimized for the needs of the PSP sure.
The thing I can't imagine is how many hours I'd put into it, but I know it would be a lot.