Well I always loved Morrowind Comes Alive mod. It adds hundreds of npc's to the game world and makes it look more alive that way. Vanilla morrowind has very few npc's in towns.
Morrowind Visual Pack is good for HD textures.
Better Bodies makes bodies... better.
Blocking Enhanced makes blocking manual. Though personally I like the character skill based system more, but that's just me.
MGE allows to tweak the settings past default. You can increase your view distance to pretty much infinity, however in my opinion the fog adds to the atmosphere of the game. If I recall, MGE also makes the game support any resolution, which is nice if your monitor has higher res than 1024x768 (who doesn't these days?) and especially nice, if you have a widescreen.
EDIT: All of the mods should be availible at planet elder scrolls, just search there.