That's nowhere near the worst exploit in Morrowind. Potions let you temporarily improve stats, which lets you make better potions. You can very rapidly make this spiral into godlike power, very early on in the game.
You could basically make a Fortify Alchemy 100 for 1 second spell, and because potion crafting paused the game, you'd cast it, open your inventory and voila, infinite potion crafting at max skill level.
But potions need ingredients you say? Find a merchant that restocks the ingredients you want. Buy them. Close and re-open the inventory - the merchant should have immediately re-stocked. Neat. You could just repeatet that but that's too tedious. Instead, sell the incredients back to them. Close and re-open the window and buy all of the ingredient agiant. Close and re-open the window and the merchant will have re-stocked the total number they had before. Repeat for exponentially increasing stocks.