Right,

I seem to have gone out of the loop here.

Am I right to believe that the Unoffical Morrowind Patch evolved into the Morrowind Patch Project and was in beta stage? Has any more work been done on this? I am pretty sure I saw BTB mention something about an update...

Also while I am here is there an online readme taht I can have a look at as I have some thoughts about some mods that I might not need if they are contained in the patch project.

http://www.gamesas.com/index.php?/topic/1160045-is-the-morrowind-patch-project-still-relevant/ may have more information regarding the topic, but I believe you are correct - Unofficial Morrowind Patch became the Morrowind Patch Project and is currently sitting at v1.6.5 beta. BTB has released his own fix of v1.6.5b, which addressed a couple of issues which weren't resolved by the beta release. Apparently Quarn is back and plans on bringing it out of beta and releas-- NO, NO PORTAL REFERENCES.

Did the Morrowind Text Patch end up being integrated into MPP?

hmm yes it seems BTB's is the latest one.

As for the text patch I am not too sure

it seems that part fo the text patch was included - not books apprently.

books were included in the last beta. with btb's extra patch, there really isn't any outstanding issues except for some name changes.