The choice of whether or not to kill Vivec is entirely your own but there are some points that should be noted.
The main plot in Morrowind is to become the Nerevarine, unite the House Dunmer and the tribes and to "cast down the false gods" (Vivec, Almalexia, Sotha Sil). If you kill Vivec you will get a message telling you that you have killed an essential character, regardless of whether the main plot is complete yet or not. Vivec is, however NOT an essential character once Dagoth Ur is destroyed. When you have killed Dagoth Ur and destroyed Akhulakhan the main plot is over and you can feel free to kill Vivec if you want to, as he has no further purpose in the game.
Should you choose to kill Vivec before the main quest is complete, there is a backdoor quest involving Wraithguard. To be able to safely equip it you must first take it to Yagrum Bagarn (the last Dwarf) in the bowels of Divyath Fyrs' Corprusarium at Tel Fyr. Finding out about this quest in the game is not easy.
With the Tribunal expansion pack installed, the plot to kill Vivec is elaborated on further with the death of Almalexia and Sotha Sil. Because of how the game works, though, he will remain an "essential" character even after he has fulfilled his purpose and you will still receive a warning message if you kill him.
NB: No-one will "reward" you for killing Vivec (Or Almalexia). In fact, most NPCs dispositions will go down if you try to tell them what happened (and they don't believe you anyway!)
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