Well... its by design on a time crunch becuz the game has to be finalized and released. The big game production houses work thier coders with a deadline for release and sometimes features are squished from "working correctly" into "working" due to time considerations. I believe this is what happened with the 11 month bug that MCP fixes. The commercial companies have a major advantage over someone doing a re-write or a brand new game cuz they get paid to do it (and thus don't have to juggle a job with their creation) BUT they have a job to do and that means delivering a finalized product by such-and-such a date. If you are here on this forum, then you love MW or at least like it (me, I love this game and it beats out all others), but I don't think that it was meant to be that if you take a cup then all other cups gain the ownership flag of the person you stole the original from... until then next time you steal a cup.
But, again this is my opinion and I have been wrong before (gasp!)
More importantly than my opinion is this: the ONLY way to fix this is to remove ownership of ALL items in-game? Don't NPCs react if you steal some other NPCs items? What about having an NPC whose references persist and is like an owner of everything (bill gates?) as in all the ownership is assigned to that guy and he never appears in game. Wouldn't you still be able to tell (by script) if an item is stolen but not have the merchants freak out? Still would be a huge and ridiculous work-around...
ST
There's a tendency to say something is a bug because a game mechanism doesn't work the way one wants it to - game designers are often forced to put such behavior into their games due to restrictions in the engine. One needs to remember that Morrowind is an old game,
one initially developed for a console platform (no modding) and later ported to a pc platform [correction] one that was developed with console platforming in mind after initial pc development was started. The developers did not have the luxury of hindsight back then as we have with all the subsequent advances in game design and hardware capabilities.
One of the restrictions is that there is only one object id that's referenced for all instances of that object - when an item is flagged as stolen, it's recorded in the save with that shared object id and the NPC id of whoever had ownership of the particular object reference. There's no way to discern between items as stolen / not stolen unless each object is unique.
Removing ownership from all items is not a fix for the problem - I was pointing out that, as far as modding within the context of a plugin, there wouldn't be another way to affect stolen flags except to avoid them completely, which defeats the purpose. And we're talking about modifying the items flagged as stolen once they're recorded in the save game - I don't know of any way to directly modify those individually via script, the game engine is handling them behind the scenes. I guess it would be possible to periodically run 'PayFineThief' (keeps items in inventory and "cleans AI"), but I'm not sure if that also clears the save game's stolen items list, and in any case it's all the items (by object id found in inventory) or nothing.