Summary
Changes dialogue logic, so that the player character is considered naked if they have their torso and legs exposed,
instead of treating having any single apparel item equipped as being decently clothed.

Requires OpenMW Lua. For MWSE, there's a more advanced mod with a similar idea, Cover Yourself.

NOTE: This mod should be considered in development. Although it mostly works, it resorts to some inelegant hacks.
It also requires every single dialogue info checking if the player character is naked to be explicitly modified.
Hopefully, OpenMW Lua will become mature enough for this mod to work without explicit dialogue modification.
That would be required for what I would consider version 1.0 of this mod.

Requirements

• OpenMW 0.48.0
• Patch for Purists 4.0.2 (optional)
  

Rationale
Morrowind has a whole host of amusing NPC reactions to the player character being naked.

However, the built-in check for that takes into account every single wearable item that the player character has equipped. So the character is not considered naked if they're wearing even a single item that's not even visible on the model, like a ring or a belt. Cue jokes.

This mod makes the NPCs react to the player character as being naked if both their torso and legs are exposed.

It makes the NPC reactions seem more sensible, and also easier to actually stumble upon during gameplay. Morrowind's encumbrance system provides some reason to actually run around without clothes, for example when moving massive amounts of loot, while it's generally never worth it to unequip every magical trinket that basically weighs nothing.

Installation
The mod is split into two subdirectories. Each of them should be, as a whole, a separate data directory in OpenMW configuration.

00 Core
This is the basic part of the mod, required for it to work.
Both the .esp and .omwscripts files should be activated as content files in OpenMW configuration, the order doesn't matter.

01 Patch for Purists
Patch for Purists fixes some and adds some more dialogue checks for the PC being naked.
If you're using Patch for Purists, add this data directory after both "00 Core" and Patch for Purist's directory.
The .esp file must be activated as content file after both "better-decency-check.esp" and "Patch for Purists.esm".

Known Issues
If you're playing the game without Patch for Purists, the naked reactions for Khaiit NPCs never seem to trigger.
This seems to be a bug in Morrowind itself, as it also happens for unmodded naked checks.

If any mod adds NPC reactions to the player being naked, using the built-in "PC Clothing Modifier" checks,
they won't be compatible with this mod without a compatibility .esp file.
This is an unfortunate limitation of current OpenMW Lua capabilities, that will hopefully go away in future releases.
If you know of any mods that would be cool to make compatible with Better Decency Check, please let me know.

This mod purposefully does not modify naked checks that are part of quest(s). :)

Compatibility
This mod is not compatible with any mod that modifies the responses of NPCs to the PC being naked.

Other than that, it should have no conflicts, aside from the above mentioned issue that it won't automatically trigger for new naked checks added by mods.

This mod does not modify saved games at all, so it's safe to add or remove mid-gameplay.

To Do
This mod is not considered finished yet. There are multiple things that are under consideration for improvements.

• Teleporting script holders in the core .esp file are used to manipulate a global variable used for the PC naked checks.
  This is because OpenMW Lua in 0.48.0 can't manipulate globals or MWScript directly. I gleaned this trick from the work of ZackHasACat. This should be made unnecessary by OpenMW 0.49.0.
• A global variable check is used to replace the built-in "PC Clothing Modifier" check, and the actual check logic is run in Lua (it's impossible in MWScript).
  This makes it necessary to modify each dialogue record where this should apply. It would be cool if OpenMW Lua could hook into the built-in function and override its return value, like the Cover Yourself mod seems to be able to do with MWSE. This would make the .esp files unnecessary, and the mod would be compatible with anything out of the box.
• Configuration options could be added to the mod, to customise what's considered naked, like what Cover Yourself offers.
  This would be possible in OpenMW 0.48.0 already, but the work seemed not worth it to me for such a niche mechanic. The NPCs sometimes call the PC a nudist as reaction, so the current logic of considering uncovered torso + legs as naked seems to be only logical.