Yes, version 1.2 works with NMM. Earlier version doesn't have the right folder structure inside the downloadable zip file and will get unpacked in the wrong spot by NMM.
With these types of mods, you replace the textures. Go to your Morrowind folder and go to data then textures. Unpack the mod and move the desired mod texture (there's 2 folders that contains resolutions higher than the vanilla textures) to the texture folder and overwrite them.
I wanna know before I install it. does it fight with new meshes for armor like Better Morrowind Armors or should these textures play nice with them? http://www.nexusmods.com/morrowind/mods/42509/?
Thanks. Also you should update the descripion that this is for the vanilla armor and won't work for modded armor so you won't have a hundred of me asking you this.
When you say it works with Better Morrowind Armor, did you checked the UV mapping, as the mod modifies meshes and Moranar specifies it could cause such issues.
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Thisworks for dark brotherhood armor?
Sorry my bad english :/
EDIT ... I was wrong these do work with the Better Armors mod