Are there any mods that add real books to morrowind?

Unless they had permission from the author and or publisher that would be copyright infringement.

Oh Duh,I forgot. Wouldn't it be allowed as long as they don't sell it?

No, because it could be viewed as detracting from sales of the actual book, and I don't think any author or publisher would allow that. You could probably include small parts of a book, or use some of the story lines with changed character names, locations, and so on however.

Real books = FAKE in the world of Morrowind. Just my opinion...

ummm, no... It doesn't work like that... at all.

There are, of course, public domain books which could be used... but what's the point of starting up morrowind, going down to Dorisa Darvel's and buying an in-game copy of Dracula or whatever when you could just read it normally?

http://planetelderscrolls.gamespy.com/View.php?view=Mods.Detail&id=753 by Zdim.

I'm not sure which Library mod it was but one of them had a condensed version of a number of real books - I recall picking up Lord of the Rings but it wasn't very much like the real story.

Public domain books, such as those gathered by http://en.wikipedia.org/wiki/Gutenberg_Project, would be fine to put into MW.