Yeah, I managed to get my sneak up to 50 and I can basically crawl right up to some enemies and stab them in the face. Ranged bow attacks seem pretty weak though; you only get a 1.5x modifier. I kind of prefer that though; Stealth Archer in Skyrim was pretty OP, to the point that everyone plays it, and then gets buttblasted when they try to play Morrowind that way :D.
Magic is indeed powerful. I used some scrolls during a difficult fight and it chunked the enemies' health. Only real issue is that it seems it's a lot easier to stagger you when you're in magic mode.
I have to say, I really like the main quest structure.
In Oblivion and Skyrim they just make you sit through a 10 minute or so sequence and jerk you off over how you're the chosen one from the get go.
Not Morrowind. In Morrowind you walk off the boat, no one gives a shit about you and you're playing the game in like 2 minutes. You have to integrate into society and earn some rep from the guilds, and then prove to the Ashlanders that you're the Nerevarine. You have to work for that shit, the game doesn't hand it to you and it feels so much better than the later game's instant gratification shit.