That's not what Dhruin said though, he said "generalist characters", and I agree with him.
I think I explained my opinion poorly then, or perhaps slightly misinterpreted the quote; I tend to think of a generalist character in an RPG to mean
almost the same thing as being a "master of everything" character.
Both you and Dhruin have a very valid and good point, and I'm not at all trying to say that either of you is "wrong" in any way. Yes, generalist characters by your definition can occur (meaning not maxed out at everything, but good at a lot of things if I'm interpreting your meaning correctly this time). I was more playing the "Devil's Advocate" and trying to explain what I think the strengths of the system are and why, despite the flaws, I think it generally works for The Elder Scrolls, even if it's far from perfect. Generalist characters can be a flaw in an rpg; characters can become over-powered in Morrowind's limitless system and being good at too many many skills takes away from the immersion of an rpg.
With that being said, I still enjoyed the customization that is available to players in Morrowind. I found the freedom that is offered in character development to be a refreshing change of pace from the rigid class systems of other rpgs because it allows players to build a character however they want. I think that in some rpgs, the structured classes can be pretty boring; warriors are pure tanks or heavy damage builds, mages are completely weak in melee combat but strong ranged combatants, etc. This is in no way a significant problem because it does balance the game fairly well and allows for a more "realistic" role-playing system, even if it is a bit bland in some games and predictable. Having a defined structure isn't a problem because of the balance, as well as believability and immersion, that a structured system brings. However, I enjoyed being able to create a character in Morrowind that could, for example, be a mage and still hold its own in melee combat. I didn't abuse the system because that would take away the role-playing aspect, so I didn't have many non-related skills developed from what build I had in mind, such as stealth, archery, persuasion, etc. So I guess if you stay true to what "class" you create and avoid abusing the system, then it works decently well.
I think a solution to solve the "generalist character" problem in Elder Scrolls and improve the role-playing aspect would be to still allow players to "tag" the major and minor skills that they want to develop in character generation, and either completely eliminate other skills from being developed or limit how far those skills can be improved (set a cap somewhere between 25-50? Maybe lower?) and also set a reasonable cap for the minor skills. I think this would still allow for a good amount of customization while eliminating the possibility of generalist characters.