I was actually thinking about what other games would lend well to multiplayer, and Morrowind was the one that came to mind. First of all, I'm pretty sure memory hacking is in no way illegal, although actually modify the .exe file is, although you won't need to do this. I wouldn't think the developers would stop modding, they like when the community makes their game live on.
What you'll probably need to do is become familiar with memory hacking, it's pretty easy. I'd start off finding your characters X, Y, and Z and trying to get that to go onto another character. You'll also probably need help from the game itself, as memory hacking the entire thing probably isn't possible. Luckily, Morrowind is very moddable, so you should be able to do a lot with that to help you out. I'd recommend modding in another character to be your test guy, the guy who will hopefully eventually move around as another player. Depending on Morrowind's flexibility, you may be able to put variables in which switch around what he is wearing, so later on you can simply find those variables in memory and change them accordingly.
In my opinion, it seems like an easier task than modding GTA, as you only need the person's coordinates, if they're walking and if they're attacking. Spells could be difficult, but there's time for all that later. Also, like I said, Morrowind is made to be moddable, GTA isn't, so you should be able to do a lot with that system.