I'm just finding out about morroblivion. I had a dizzying and long lived whirlwind affair with morrowind and recently replayed it for xbox... but... my god this looks like an amazing work in progress.
I understand from reading the general forum for a bit that this is running through Morrowind, but does that really mean what I think it does? Will I have all of the weapons and magic spells that are included in Morrowind or will I be restriced? Like lightning spells behave so different graphically that it caused me to question...

It doesn't run in Morrowind.
It doesn't run in Morrowind. It's essentially a mod for Oblivion, like most others for it, except it's huge. And you need to have Morrowind installed to play the mod.
The spells will be the same as Morrowind (as far as I know), but they'll "look" like Oblivion's, since it's in Oblivion's engine. The weapon and items are all from Morrowind. I don't think there's much (weapons, items, spells etc.) left out, and if there is, it will be very little.