i am fascinated by the idea of updating Morrowind in the Oblivion engine. im not a genie with 3DS max or anything, but i do have some experience. i was also thinking that importing the original model and rebuilding it is a cool idea (skeleton and ik chain, anim all still attached no doubt) the charachter still needs to come off as a fat guy on a spider chair. there ar other ways to do this though, proof of concept is decent, i got some ideas though, and as soon as i get max fired up again, im going to show what i mean.
right now i got this dwemer revitalization bug, and i really want to improve the whole Morrowind and Morroblivion experience in the light of the treatment they get in Skyrim, which is very steampunkish, as i imagined when i first played morrowind years ago.
one of the things that bothered me about morrowind is that there was obvious continuity gaps within the concepts from the design team. of course it was a different time, and graphics as they were in morrowind were a new thing, so some things just did not go from concept to reality as they were envisioned, but some things really look out of place in vanilla morrowind, and that has always bothered me, in vanilla, some characters give the impression of very real, and others were obviously something out of "rudolph the red nosed reindeer" style animation...(then when you get to the updating morrowind, and some of the old models are glaringly out of place its even worse)...my ideas are that within morrowind it is possible to create a sense of it all belongs together, and morrowblivion is a perfect chance to do that right...
within dwemer technology, they were allowed some culteral variation, no doubt, but they are dwemer, so they are predisposed to keeping things very much within the box, there is allowance for variation, but not at the expense of being practical, so there are certain things that would remain mostly uniform across the board, but of course in other regions of tamriel, there is bound to be some variation of style across the dwemer civilization.
there are several rules we have to apply to anything that represents dwemer technology, and here is my take on it
1.dwemer are a fan of the robust. they have tough armor, tough attitudes, and build things to last, which is why they are gone but their technology is still around.
2. all dwemer technology runs off of what appears to be magic, but there is also combined the elemets of steam, fire, and electricity. also there should always be glowing lights or gas lights.
3. they were a fan of copper colored metals, and whatever dwemer metal is made of, the alloy is difficult to replicate, and impossible to get teh same luster from any other metal, it is both dull and reflective at once, lighter than most other metals, but denser, therefore easier to justify thicker heavy armor with, which is why so many dwemer armors are heavy.
4. the use of gems and crystals in their technology, to focus energies, and light, act as batteries, and decoration were all seamlessly integrated.
5. their architecture rlys mostly on the stone they carved their cities out of, and was decorated with nothing more than the snaking of copper piping and tubes all over the place throughout their tunnels. gates and doors were heavy. they used extensive grating and bars where they had to for safety reasons. their doors were either large and imposing, or thick and inpenetrable like vault doors.
6. they used robots/ golems, to perform the tasks of protection so they could be free to invent and develop ideas. they wer econstantly tinkering and building new inventions in their quest for the divine. there were very few soldiers, and dwemer armor that exosts was more likely retired museum pieces, or the skin of a soldier golem. the typical dwemer, was either building, drafting, reading, or doing some other intellectual task, including the large assembly of coucils on various subjects for the purpose of debate and workshops. so all the robots still found in dwemer ruins are simply carrying out their long standing orders to protect the ruins.
7. dwemer are for the most part extinct, or have been absorbed into the outer populace long ago. why they left or died of is still somewhat of a mystery. much of their people dies off due to a rumored disease, and probably other unknown factors. speculations says they either dug into something that destroyed them, or their own machines turned on them. whatever the cause, it could even be a combinatin of all the factors involved.
so that is my take on dwemer tech and ruins. and those are really the only guidlines. they are subject to interpretation in many visual styles, but for the purposes of any modernization mod, they need to be reimagined. at the same time they cannot conflict with anything new. thats my ideas anyway.
having said all that, and trying to convey the spirit of the dwemer as best i can, im going to work on what i think represents the dwemer best and then see what you guys think...be back as soon as i can with a concept sketch.

You might find this
You might find this interesting. There's some rebuilt Morrowind dwemer tilesets, as well as his own take on Dwemer stuff.
http://tes.nexusmods.com/downloads/file.php?id=37329
Even though no one knows for sure how or why the dwarves dissappeared, I'm pretty sure it wasn't by disease. If you remember talking to the last living dwarf with corprus in Tel Fyr, he says the pretty much everyone disappeared in an instant. He speculates he didn't disappear along with them because he was outside "Mundus" (I think?) when it happened.
I thought it was because the dwarves were messing around with the heart of Lorkhan (the heart you beat to death at the end of Morrowind) and were trying to extract and harness its immense power. In doing that, they screwed something up, and their whole race vanished.