I was looking around for games to play until Skyrim's release, I played and finished AC and AC2, and now I was waiting for Deus Ex HR. Then it struck me, why not try out Morrowind? I have played many RPG games up to now but never enjoyed any as much as I have enjoyed FO and Oblivion, and many people think Morrowind was better than Oblivion. So, I was wondering, should I buy and try out Morrowind? I watched a few gameplay videos etc and the graphics really bothered me, and there are so many mods out there that I was scared to start trying them all out, then I found the "Morrowind Overhaul - Sounds & Graphics", a compilation of graphics mods I guess, kinda perfect for my type.

So what do you think? Should I buy Morrowind and install that mod? Would you recommend it?

You like action rpgs, but what part of it do you like the most? The action or the rpg?
If you hate looking at your characters stats or reading npcs dialogues, you might not like Morrowind.
If you're excited at the mere idea of exploring an unknown world and all the possibilities that goes with it, then you'll probably enjoy Morrowind.

It really depends on what you enjoy in that kind of games.

This. Morrowind seems a rather peculiar setting after the generic medieval city of Cyrdodiil, that's what got me. Are there interesting quests? Choice-making, freewill involved? That's what I look forward the most in action RPG games.

Of course, its super cheap, you cannot go wrong.

There are a lot of free will. Probably too much if you ask the common gamer. Perhaps the most common complaint is that people don't know what to do in the game, just because there are so much to do and noone pushing you in any direction. You get some small nudges but you have to work for them, this game is not on rails and that's what I love about it.
I have only finished the main quest once. In the rest of the games I have gone to the first city to talk to a guy there once just to get rid of the mark in the journal. After that I have just gone to do whatever I like. It's just great to go around and explore the whole island.
One other thing that could be important to let you know. You can't be afraid of reading. There are no voice acting (which is an extremely good thing) and at least in the beginning everyone have a lot ot interresting and important things to tell you. Talk to people and listen (read) what they say.

That's the same for me. And once you breeze through the newbie quests, there's plenty of that.
Add mods on top of that and you'll have a hard time stopping for Skyrim.