I don't know, maybe all the games are coming out with mod kits this cool these days, I haven't tried to build levels for Dungeon Siege or Neverwinter Nights, but this is frickin' cool, and a giant leap over the crappy, hall-of-mirror-prone, draw-it-line-by-line, bound-to-look-like-crap-no-matter-what-you-do stuff I used to do when building levels for Doom. Yeah, I guess it's been a while :-).
It's not too hard to get started, while the construction kit isn't the greatest, most intuitive Windows app ever, the controls become easier to use with practice. The biggest hurdle is getting accustomed to the way in which you manipulate 3D objects with a 2D visual and mouse--you end up using key combinations like holding down 'z' to indicate you want the mouse gestures to translate to movement in the z-axis direction instead of x or y. There are plenty of components to build pretty complicated interiors and exteriors, although sometimes you find yourself wishing there was another component that had a higher ceiling, with stairs, with textured walls instead of plain, etc. I can envision the level designers at Bethesda shouting to each other in the halls, "hey Joe, make me another ex_com_corner_rich2a component, but with green walls instead of brown". You can certainly create and import these textures yourself if you have the appropriate 3D object creation and rendering software.
The scripting engine built into the game is perhaps the most exciting part, allowing the level designer to control objects and NPCs in the game, add intelligence to quests, perform actions dynamically based on certain criteria, etc, etc. The language reminds me of AppleScript (e.g. begin/end blocks,
set foo to 1). The study of what you can do is so in-depth it has spawned various "Dummy's Guides" and "Scripting Bibles" available on the net. However it can be a bit frustrating when you have something in your mind that you want to do but eventually realize it is simply not possible given the limited function set. Also, you quickly realize while writing scripts that they tend to be error-prone and often do not do what you intend, due to the enormous complexities involved in the way the game works and objects interact. So as cool as the scripting engine is--and it truly is--I think it speaks a lot to its realistic potential when you realize most of the scripts Bethesda shipped with Morrowind were extremely simple--because anything more complicated didn't work well and couldn't make it past QA.
After a few practice mods, I decided to make a house for the player, as many first-time
modders do. It's a natural choice because it's easy, quite practical (i.e. somewhere to
store your extra junk), and for some reason the game never gives you one (not until the
Bloodmoon expansion, that is) [correction 4/04: you can get a house by pursuing one of the
House faction quests]. Groping for a name I picked "Hero's Hovel", liking the
alliteration, and chuckling to myself over its cheesiness. The screenshots to the right
show the exterior I created, using components from the "Nordic" theme (grey stone). I
picked a mountainside area outside Pelegiad (a quiet, civilized area in the Southwest)
which was otherwise unoccupied. You can see the extensive wooden platforms and stairs I
added to give access from the area below. Inside I created a three-story structure, with
a living area, an NPC to act as your personal assistant, a cellar, and a series of one-way
magic portals to various key locations around the land (a la the Matrix). Fun, and
I decided to post my mod to the Morrowind Summit, just for fun. I later found out about 450 other people have posted house mods (d'oh!), but despite the competition mine's managed to rack up over 1500 downloads so far, three "excellent" ratings, and quite a few positive responses via the site's comment system and direct emails. Unfortunately the one thing marring this otherwise enjoyable experience was the negative feedback and several rounds of emails from one certain user who, in retrospect, has managed to make something of a name for himself on the site by doing nothing more than trashing every uploaded mod, including mine. Internet users beware: Napoleon is alive and well, age 14, and posting on a forum near you.
You can find my mod here (hosted on gamespy, to download you'll need a fileplanet login) or here (direct). It's been fun, but surprisingly time consuming.
Final note: the construction kit is impressive but it's still easy to foresee even better tools for level designers, automating more of your tasks, further distancing you from the nitty gritty details, sanity checking more of your work, etc. The scripting engine is impressive but still could be so much cooler if it were more powerful. For both playing and modding purposes, I'm definitely looking forward to the next installment.