Would it be possible to fix the dreaded terrain blending bug? Though I have Texture Fix, many areas are changed by other mods and therefore seam-y again. Also, can you fix that bug where light is cut off at the end of one static? Example: a candle makes light, but it has a big seam on the edge of one static used in making the interior. What about that shadows-showing-through-the-ceiling bug?
Unfortunately, I think all three bugs are very unlikely to be fixed with the methods used by the MCP.
Terrain blending: While the limitation to blend a maximum of two textures *may* be a bug in the respective algorithm (in which case it would be easier to fix), it's more likely that the developers simply didn't deem a three-texture merge necessary, or too costly forperformance, and therefore never implemented it. In that case, fixing the issue would require a new and more complex algorithm to be written. It's possible, but very difficult.
Lighting seams: Again that's not a bug, but a limitation of the engine - Morrowind calculates the light level for one point of a surface and then applies it to the whole surface, so when you're walking along large surfaces, you'll have very visible seams. Fixing this would require rewriting the way how Morrowind handles light, it's not a matter of couple of faulty bytes that need tweaking.
Shadows: Not sure about that one, but it might be a limitation of the way how Morrowind uses an 8-bit stencil buffer for shadows (and a 24-bit z-buffer for anything else). It could be that 8 bits are just too inaccurate. That's just guessing on my part though.