I haven´t noticed these weird cuts on the normal maps I use, so I don´t think it´s an engine bug.
Edit: Just for the funzies I decided to take a look. Here you can see what´s wrong:
http://i.imgur.com/di3LLNn.png
These parts are basically not connected in the UV map. Thus the sharp and sudden cut. Also look at how the faces are roated in the UV-map vs how they appear on the actual object. 2 wall sections are rotated 90 degrees, while door section is not rotated at all. Whoever UV-mapped this is as bad as me at it.
![Very Happy :D](./images/smilies/icon_e_biggrin.gif)
So wait. Why don´t vanilla textures have this problem? Actually, they do. Grab a magnifying glass and prepare to strain your eyes.
http://i.imgur.com/ZY3yTb1.png
Do you see it? There is a hardly noticeable line where the texture mismatches itself. Morrowind devs got away with it because their textures are so blurry that you hardly notice stuff like this. However when you start making HD specular bump maps, it´s going to show. Mystery solved.