Using my trusty PS2-style controller, I've been honing the perfect Morrowind gamepad setup for well over six years now. And by gum, I think I've finally nailed it. Joy2Key has granted me, among other things, total freedom of key mapping and the ability to adjust the speed of the mouse cursor by holding a chosen button down. The macro editor in MGE has allowed for console commands with a single button press and other functions that were previously impossible with any single keystroke. Lastly, the Morrowind Code Patch has finally given us a general-purpose "cancel/exit window" button as well as made the selection of an entire stack of items the "default" choice when grabbing stuff out of your inventory.
And now, because this board is [censored] [censored] when it comes to tabbed spaces: http://btb2.free.fr/temp/morrowind.txt