I always just used the soultrap glitch to "patch up" those annoying inconsistencies. I thought Morrowind was great and probably enjoyed it more than Oblivion...but Morrowind on Oblivion's engine would have been sweet (forgive me if someone actually did this, I've heard rumors).
I know that a team(s) were working on this, but it was mostly just to add Vvardenfel to Oblivion's Map. I don't think they remade the game, but last time I checked (years ago) they had abandoned the project because they were making part of the mainland as well.
