no i think morphy would win on tactics
Paul Morphy vs Wilhelm Steinitz
Quoting "We cannot estimate, however, how much Morphy might have improved if he had continued active play, especially against stronger opponents.", if I am not mistaken he was already the strongest at his peak so there is no one who is stronger that him or is there?
It would have been great if those two meet in a match. I am dreaming of a double round robin tournament where the participants will include Morphy, Alekhine, Tal, Fischer and Kasparov at their peaks. =)

According to Rod Edward's Edo chess site which specializes in pre-20th century chess, Steinitz had a peak retrograde rating of 2803 in 1876 while Morphy had a peak retrograde rating of 2796 in 1860. The obvious difference in the results of the two rating systems (by Sonas and Edwards) shows the potential for mis-interpretation of results since the supposedly objective data is really very much subjective in that each statician must make choices in what he uses and what he ignores, as well as the amount of data he's able or willing to use. You can read Mr. Edward's methodology here.
Possibly even more telling might be the opinions of strong players who met both OTB: http://www.edochess.ca/batgirl/BirdTalk.html and http://www.edochess.ca/batgirl/Paulsen_Morphy1891.html

If you check the historical ratings that statistician Jeff Sonas calculated and posted at his www.chessmetrics.com site, you will find that Morphy had a highest rating of 2743, while Steinitz hit 2826 (after his 7-0 crush of Blackburne in 1876). Using FIDE's rating calculator, this would suggest Steinitz at his peak (versus Morphy at his peak) would have won an old-style world championship match of 24 games by a 14.5-9.5 margin. We cannot estimate, however, how much Morphy might have improved if he had continued active play, especially against stronger opponents. On the flip side, we also have to realize that Morphy's contemporaries, after that first, glorious year, would have gradually figured out his methods and began to use them against him. That is what happens to every great player.
Great matches that should have happened and did not: Morphy-Steinitz, Lasker-Rubinstein, Alekhine-Capablanca (rematch), Alekhine-Keres, Alekhine-Botvinnik, Botvinnik-Keres, and, above all, Fischer-Karpov. Other suggestions?
This is a great list.
I would add:
Reschevsky-Botvinnik (as Bronstein admitted, the 1953 Candidates had a little smoke-filled back room negotiating going on, and not in Reschevsky's favor!)
Tal-Nezhmetdinov
Kasparov-Deep Blue

The obvious difference in the results of the two rating systems (by Sonas and Edwards) shows the potential for mis-interpretation of results since the supposedly objective data is really very much subjective in that each statician must make choices in what he uses and what he ignores, as well as the amount of data he's able or willing to use.
Also the fact that there weren't nearly as many games played then (and the whole atmosphere of competitive chess was different as well) makes any such attempts even less reliable than they ordinarily would be.

Yes, one must look at any retrograde rating system with a certain caution. Times were indeed different then than now. One thing that Mr. Edwards considers that Mr. Sonas ignores is odds games. Normally, one wouldn't use such games in determining a rating, but odds games were an intrinsic part of chess almost to the turn of the century (actually the use of odds was a type of rating system in itself) and to ignore them, or minimize their significance is to see that era only with modern vision while turning a blind eye to its own reality. I'm not sure I would even call these retro-ratings unreliable, since they're probably statistically correct according to the statician's POV. But I would say they don't necessarily represent what many people believe them to represent and to use them as "proof" or as one might use real ratings or any other objecte data denies their subjective side.

Well, let's just say they're every bit as reliable as the statistician's POV...
Works for me.

Of course Morphy and Steinitz met. Here's the interview. There's no speculation why Morphy and Steinitz never played - the answer is very apparent. Morphy had retired from public chess by 1862, thereafter playing only a few friends. Steinitz wasn't in the least qualified to challenge Morphy prior to Morphy's retirement. Out with the old, in with the new.

Double Round robin featuring
Greco
Ruy Lopez
Paul Morphy
Adolf Anderssen
Alexander Alekhine
Mikhail Tal
Bobby Fischer
Garry Kasparov
Anatoly Karpov
Victor Korchnoi
Deep Blue

Of course Morphy and Steinitz met. Here's the interview. There's no speculation why Morphy and Steinitz never played - the answer is very apparent. Morphy had retired from public chess by 1862, thereafter playing only a few friends. Steinitz wasn't in the least qualified to challenge Morphy prior to Morphy's retirement. Out with the old, in with the new.
Thanks for posting that very interesting interview. Each generation in chess seems to make similar observations about the preceeding generation. The interview kind of makes the legends come to life for a moment.
They were in the same era if I am not mistaken but they did not meet to play one another, do you think Steinitz can actually prevail over Morphy?