Certainly, but being unable to interact with NPCs on a nightly basis was just too much. I havn't played Morrowind for ages so I could be wrong on that? The NPCs attack on sight, I thought.
Yes, in Bloodmoon you changed every night and NPCs would attack on sight.
Bloodmoon's lycanthropy was mostly designed for its main quest, which made sense to change nightly. You were expected to get the cure afterward, and use Hircine's Ring if you wanted to still be a werewolf. Luckilly, there's mods to fix it so you don't change every night after the MQ. There's also mods to make Hircine's Ring prevent transformations, which allows you to stay normal at night. And mods to make it so being seen changing only affects the area you were seen in for a limited time.