I don't know how Morrowind does it
Morrowind was leveled, but not scaled.
These terms are usually used incorrectly. Here are the four components of Oblivion and Skyrim's leveling/scaling mechanic:
Loot Leveling - controls when loot appears
Enemy Leveling - controls when enemies appear
Loot Scaling - controls the strength of loot once it has appeared
Enemy Scaling - controls the strength of enemies once they have appeared
Morrowind's enemies were leveled but not scaled. Nix-Hounds appear around character level 5 and are always level 7 creature no matter when they are encountered. Golden Saints appear around level 20 and will always be a level 20 creature.
The same is true of loot. It is leveled, but not scaled. It appears much as it does in Oblivion and Skyrim but any stats it possesses are fixed. There is no need to wait until a higher level to do a quest in order to get a better version of an item in Morrowind.