I have no scripting experience whatsoever, so I decided to throw this idea out there.
We all know how in the beginning of Morrowind, you have been taken from the Imperial City's prison, (The one you start off in at the beginning of Oblivion.) And it states you did not know your parents or they left you, so I thought of this... Everyone in Vvardenfell has a bloodline, why not you? What I am suggesting is that you have an Aunt or Uncle or both!
- How I think it should start: When you talk to Sellus Gravius, he will alert you of your family in that state, seeing that they are in charge of citizenship, then you will track down your distant family one of the island's many cities, or it could be an estate in the middle of nowhere!
What should be expected:
A menu where you can choose what your family members are, and mod patches so modded races could have family as well.
An ancestral tomb of sorts, seeing that your cousins must have been there for some time.
Drama of course! (Land Feuds, Family Ancestral Tomb invaded by Necromancer/Vampire Clan, etc.)
I just came up with this off the fly, and it might be too much, but hey, it's just an idea!.