Does Morthal seriously not have a Blacksmith, OR a Trader? I just walked around town for ten minutes trying to find one, then checked on the wiki page which seems to suggest that there is, in fact, no Blacksmith or Trader. What's the point of even having a town there if all I can do is sell herbs and spare potions to the apothecary?

Unless I'm just missing something, this is a seriously huge oversight...I don't want to explore Morthal only to have to fast travel to Whiterun or Solitude everytime I get towards max encumbrance - or just about after every dungeon.

Get the Merchant Perk in the Speech Tree, and you can sell anything you want.

sorry i was thinking of Markarth

That's Markarth, not Morthal.

Does anyone know of a good mod to expand Morthal? Even if it just adds a Blacksmith/Trader? I've seen several in browsing Skyrim Nexus but didn't know which to choose.

There's also a wizard there (who also trains conjuration). However, he's not in the Jarl's house but has his own house and I don't think he unlocks his door until 2:00pm (or is it 4pm?); and he won't sell/trade after 8:00pm like most shops so there's a relatively short time-window to access him.

There's a stormcloak and imperial camp relatively close to Morthal (both NE) where you can sell armor and weapons -- not sure how the CW quest impacts these though. Even with just brisk walking I've hit both of them and roundtripped it back to Morthal in one long day (dawn to dusk).

I'm hoping that future patches/DLC expands towns like Morthal a bit. Not much, of course, but a few additional NPCs wouldn't go astray (Blacksmith, trader in the case of Morthal).

Well that's true but if you don't care about the other Speech perks you have to waste a couple perks in that tree just to get that one. Plus you're still stuck with the same number of vendors in any given location, even if you can sell them anything you've only got two vendors to buy your stuff instead of four or five and they might not have enough gold between them. The caravans don't even stop in Morthal so they're not an option there either.

I'm with lilbear, if you've got weapons/armor you can't sell in Morthal then give one of the nearby CW camps a try. Since Hjaalmarch starts off as Imperial the Legion camp may not appear there until/unless you take the hold for the Stormcloaks, but the SC camp should be there at least up until that point. The UESP says that the Hjaalmarch Imperial camp doesn't have a quartermaster though, so I'm wondering if lilbear is talking about the same camp or maybe that got patched. There is a QM at the Stormcloak camp, usually with 1000 gold. He also sells the usual stuff you can buy from a smith and there will be an anvil, workbench and grindstone there if you want to improve anything before or after your transactions. If you've got ore you can also smelt it at Stonehills mine which is not that far away either.

If you are neutral you should be able to do business in the camps of both sides, if you are already aligned with one side or the other you will probably get warned off by the soldiers in enemy camps and they are likely to go hostile if you get too close. Stick with your own guys if you've already picked a side.