It's almost like you have read my posts over the years. I've done this with almosty every one of my Morrowind and Oblivion characters over the years (I haven't done it in Skyrim yet). I almost always make a unique player home for each character before I begin a game. It's part of the pre-game backstory creation process for me. And after the character's story is finished I recreate them as NPCs and place them in their house. In Oblivion I am able to assign AI packages to them (something I couldn't do in Morrowind) so that they can wander in and out of their house, go on hunting or shopping trips, ect.
In Morrowind I occasionally made them the owners of shops. I once retired a blunt-weapon-weilding character to a shop in Seyda Neen that sold all the vanilla blunt weapons in the game. One of my archer character retired to become a vendor selling quivers and bows in my Durzog Quivers mod.
Current characters often visit past characters. I use this as an underhanded way to get around the "player knowledge/character knowledge" problem that roleplayers face. I roleplay that my past character gives my current character info and advice. This comes at a price, though. I have a sneaking suspicion that they sit around the kitchen table and gossip about me.