I've come along much further than I expected. I have only quests to script atm and to finish Goblinwatch's interior and New Sorpigal is complete (the forge however is not as I'll be doing it with Mist).

If it was more like Hexen, with its speed, and mini-bosses, and more puzzles on the maps, and why not co-op, hehe, it would be the best game in the world (to me that is).

But I'm mostly the turn-based strategy guy -- not quite into these types of games. I liked Torchlight 1 for the cartoony feel (esp. if you turn off the gore) and for the fact that there were lots of meaningful abilities (and that the XP you can get from the whole game is sufficient to get roughly 1/3 of those, so it's never just "maxing out everything") and because of the pet that can carry you stuff around and sell it in the town (and cast some nice spells too, if you give him the scrolls) and some more things.

Occasionally I play Diablo 1 (it's short so I can finish it before it starts to be boring ), but still, the only interesting character for me is the mage and the game is basically over when you get a fireball book and/or the mana shield book.

There is a great co-op let's play of Hexen 1 on YouTube. That's my experience of the first game pretty much, then just a bit of playing around in it in the Doomsday engine.

But I've played pretty far into Hexen 2, which implements the same concept of puzzles and co-op, and let's not forget: fast running! But it lacks the first games classical charm. So it's just the concept that's interesting to me.

The levels in Hexen are also less linear than most might and magic levels, as some puzzles are pretty spread out. And you can teleport between levels, but no open-world, or proper RPG elements.

Even the Goblinwatch is quite a complicated dungeon. I'd expect a few simple rooms with a few simple monsters for the first dungeon of the game. But no way.

(And as for the puzzles: it looks like Hexen's idea of a puzzle is a ton of hidden switches you need to flip, as far one from another as possible. Which is not particularly appealing to me.)

Another thing is the big juicy item art, which I find quite important.
And being able to slay a hoard of enemies and just walk through speed-looting *ka-ching-ching-ching*, hehe.
And having LOTS of LOOT as well! that's what makes an action-RPG!

It being so actiony as well as requiring some slower action (reconsidering, evaluating) at times is what makes it so enjoyable to me.

I think you'd have to chose a pure game engine to replicate it better. It will require learning quite a bit, but it would be worth it.
Also, the Morrowind Construction Set looks very clumsy, and I doubt you'd miss it after learning a proper game engine.
It will take a while to get even the basic RPG elements in, sure, but the results will be more satisfying.
But you might find the Morrowind RPG system sufficient, and just want to add content to it. So it would be fine.
But for this course, I'd recommend just making New Sorpigal and the surrounding lands richer with content.
Or you'll end up with a game like MM9, which is extremely sparse, and misses a lot of simple things which made the earlier games great.