I played Morrowind for 7+ years, and only while watching this http://www.youtube.com/watch?v=YaKBctXFxds on youtube. Did I realize that Dagoth Ur, says something along the lines of: "Oh, and bring wraithguard I have need of it".

My question is. If Dagoth Ur is divine why does he need wraithguard? Does that mean if he were just to have sunder or keening in his hands, it will kill him? I assume the same can be said of the Tribunal.

So in closing. Kragenac's tools were so powerful, that if used without the necessary precautions, it can kill even a God?

It killed the a heart of the god, but remember if you try to even go near a god or a divine they will blast you to pieces before you could get near them. The heart of Lorkhan was not sentient.

Well it didn't actually kill the heart. The tools broke the enchantments, that were binding it to this world. But I understand what you mean.

Dagoth Ur has been killed by the Tribunal many times. He reappears after each destruction.

If you kill Vivec before destroying the Heart, he probably was on his way back as well.

He wanted to remove the Tribunal's divinity. He knew that as long as they were gods, they could challenge his rule.

Kagrenac had mastered the ability to unmake an entire race down to it's base elements and concepts-that-compose-existence and recompose it as a god.

Killing a god should be child's play to his tools, not to mention that the gods in question were made by the tools. They are not above them.

Their power is in manipulating the Heart. I don't think they're too powerful with nothing tonal to bang on.

On one of my earliest playthroughs of Morrowind, I had a character that destroyed the Enchantments on the Heart without ever getting Wraithgaurd, but the Enchanted Robe that made this possible was modified in the first patch.
Wraithgaurd may have been neccessary to activate Akulakahn properly, but I doubt Dagoth-Ur needed it to wield Sunder and Keening.

The negative effects of Wraithguard in the game aren't necessarily reflective of the artifact's properties in lore.

What does Vivec say it does?