there's mods like morrowind comes alive and such that help with the static problem.
Not really.
The NPCs just teleport from one place to another at specific times.
It's a small help, though.
Yep, the implementation is super janky. The fact is, building up a "Radiant AI"-esque scheduling system for Morrowind would be an immense amount of work, requiring modders to design schedules for over 1,000 NPCs (conservative estimate since the game has over 2,600 but it includes bandits etc.). Using vanilla MWScript this would be impossible, although MWSE and Lua certainly makes it possible in the future if some maniacs are willing to attempt it. As of November 2018,
guards can finally follow you into buildings, which is quite exciting, and demonstrates the ability to make NPCs actually move around the world instead of teleporting.
Edit: OpenMW also doesn't have MWSE and Lua so these kind of shit is going to be limited to vanilla for the foreseeable future