Thanks for all the answers folks! I think increasing distance will hurt my computer really bad, I am more looking for better character models and textures is that really demanding?
No, it isn't. I've got a ton of retextures and 200+ mods running on a mediumweight machine, and still have excellent FPS in Morrowind. The key is to make a backup first of your texture and mesh subdirectories, then install replacements and try the game out. The FPS killers are almost always 1) outdoors graphical replacements, or 2) mods of any sort that run a ton of scripts. You can get away with mods that change indoor textures, and there are plenty of outdoor ones that make things look better without slowing things down. Just do some visual comparisons. http://etherealsoftware.com.au/textpacks/index2.htm
As for MGE, some people swear by it, others swear at it. It can produce magical results, but requires a lot of personal adjustment to each system, and may work only partway. I suggest giving the Morrowind FPS Optimizer 1.9x a try. It focuses on mainly one thing, increasing visual distance. It does this extremely well, and you can set it to scale automatically depending on your FPS, if you'd like.