I was mainly talking about Morrowind, but what you say does apply to TES games in general. Naturally Morrowind was not without flaws, grand flaws.
Just to clarify; I ended up hating Oblivion, even with all the mods and hard work trying to enjoy it. Morrowind was indeed shallow and rather empty, but mods filled the world quite nicely with action.
But you can befriend everybody in Risen too, can't you? The bandit smith will sell you his cluttered wares even if you're an Inquisition warrior. If there was any real aggro between factions in Risen, they would attack you on sight. Also, the robed Monastery zealots wouldn't allow the Don's emissary to wander about, stealing and ripping them off.
But you can do all that in Risen, in Morrowind, in Oblivion, in Gothic 2 and 3… etc. Gothic 3 was even funnier, you could walk around the cities wearing rebel armor, whereas a random rebel NPC would be killed at the gate.
edit: I just remembered, Oblivion did allow you to join all factions but there was a mod for Morrowind that added faction relationships and increased the requirements to join. Even the original design required specific skills and attributes in order to join, a warrior didn't necessarily have the required skill in Destruction magic to join the Mages Guild for example. Also the factions didn't offer ANY services to other faction members with the mod. One plus to replay value.