Anyone have any experience with this mod? It looks kind of interesting and I like the idea of randomly generated quests.

mlox includes this note:

[NOTE]
> 'MWInhabitants Freeform (Vol 1).esp'
| !! Uses deprecated AddToLev* function to modify gamesas leveled lists. Using any of these plugins will store leveled lists in your savegame that will override lists in your merged leveled lists plugin (e.g. "Mashed Lists.esp"), if you have one. If you have used one of these plugins, you can clean modified leveled lists from your savegame using the "Repair All" feature of "Wrye Mash". For an explanation of why the functions AddToLev*/RemoveFromLev* are deprecated, please see (Some patches may be available at that link):
| !! http://www.uesp.net/wiki/Tes3Mod:Leveled_Lists

Does the underlined sentance mean that using this mod will nullify any changes made by the merged lists esp, so that none of the other changes to levelled lists made by other mods will appear in your game?

Yes. Basically the plugin needs to be changed to not use the method it does for leveled lists.

Well, shoot. That's what I thought, but I was hoping I was wrong. I like the idea behind this plugin, but not enough to override all the other plugins in my list that change levelled lists.

Using those functions mean that the levelled lists are changed, those changes have to be stored somewhere and a plugin can't be generated on the fly. So, the changes are stored in your save game. Save games load after mods so the levelled lists in your save game override the corresponding entries in your merged levelled list plugin. If those levelled lists are unique to a mod then this probably isn't a problem as you're unlikely to be adding another mod which affects those levelled lists.

If you do add a mod which affects a levelled list stored in your savegame then re-creating your levelled list plugin will not mean that the new mod's changes show in the game.

If your mod list is stable throughout a play through though, you could use a mod which uses these functions. You will not be changing the contents of your merged levelled list plugin and so the functions will be modifying from the base lists in your merged levelled list plugin.

Hope that make sense, it's late here and I'm off to bed.