One thing I've never quite worked out despite playing Morrowind several times. Should I always use the best alchemy equipment I can lay my hands on or should I use equipment more in line with my rank?I do recall that there is one dungeon you get sent to as part of a quest (can't recall who sends you - mage or fighters guild probably) which has high level (grandmaster?) alchemy equipment. But I always notice a low rate of success with using it. Should I stick to low level stuff until my skills improve?

Nah, i don't think so. It works the same as with lockpicks and repairhammers and thongs, the better the quality, the bigger the chance of a succesful attempt. Just keep trying. ;)