And remember, a RPG is a game where you're playing a role, which is very vague meaning that there's no way you can say this is a mediocre RPG based on the lack of C&C as you still play a role.
It's not just the lack of C&C, as Hass nicely said.
And yeah, there are many approaches. But I think we all can be clear that Morrowind is not a dungeon crawler and not a clone to the gameplay of Diablo, where the only way to define it as RPG is the gameplay.
However, when I am talking about role playing, I am talking about the narrative. The way of role playing that you see in Plansecape Torment, Arcanum, Fallout 1, New Vegas, and to some extend Baldurs Gate and Kotor 2. The idea that you create a character with a certain personality and the oportunity to actually
play this personality. I am talking about the typical archetypes. Characters with different motivations and philsophies. Baldurs Gate 2 for example, has a decent interaction between the player and his party. Evil characters, for the lack of better words, might leave your party permanently if you decide to solve quests in a "good way". And certain characters would always get in a quarel with each other, because they have conflicting views.
Most RPGs, particularly today, don't offer you the narrative to explore that and create rather theme parks for the player. And the most of role playing you get is the choice to use a sword, bow or fireball to kill the big evil guy. And this kinda became the standard for role playing games today. And I see why, because it makes you feel powerfull. Imagine a character you really like leaving your party, and why? Only because you decided to save the dancel in distress! But this dancel killed the sister of your party member. So, he's leaving. Oh the horror of role playing a good character! Most players today want their cake and eat it too as far as RPGs goes. And thus you end up very often with a game that avoids any kind of
conflict for the player.
Morrowind as game, simply doesn't allow you much of that, because of it's very limited dialogue and player interaction with the narrative and NPCs.