This would allow the individual to appropriately name their spells, and in very few keystrokes select their intended effect from an index generated by the utilities' automated algorithms - for example;
The spells my character owns under the letter 'f' are called fireball, greater fireball and firestorm. To select fireball, I would hold down a modifier key (let's say shift for practical purposes) and press 'fb'. Selecting greater fireball could be managed by holding down the modifier key and pressing 'gfb'. Firestorm would naturally be 'fs'. Also, for spells that don't merit a spot on your hotkeys, this system would take the pain out of finding them on your spell list.
Perhaps in battle this would eliminate the bonus one gets while having the screen paused searching for the right spell to use - a good thing or a bad thing depending on your interpretation. The benefits of this in the field while not under any particular stress are hard to argue against.
I have no experience whatsoever with modding morrowind, scripting or anything of that nature - a good idea though? Would it be possible to implement?