Apparently, since before Playstation consoles used cartridges, it worked in favor of the mechanic since you could basically add state controlers to every Shang Tsung morph without load times.
In Theory, i think every character was Shang Tsung back then, and his states were all scattered through the select screen as characters, but when shang is fighting, you could use command do access other states controlers for a limited time.
i.e : state 3100 = Jax, State 1200 = Scorpion, State 2010 = Cyrax, etc etc
when Shang performs:
B,F,D+LP Triggers = state 3100
BL, BL, BL Triggers = State 2010
F, F, D + LP Triggers = 1200
While in morph state when times => 10 secs once shang returns to default stance he morphs back to default shang.
They probably went with the same tech again in Trilogy but since the disk space were 700 MB back then, to access other parts of the disk it costed load times, this has hurt the PS version of Shang Tsung since to morph into anyone it would freeze the game to access the data, they even had an option named "limited" where you could limit his morphs to 4 different characters, or only to pallete swaps since these were easier to load.
My guess the way UMK3, MKT and MK2 were codded was:
Shang ()
Every Other character that is not shang stays coded inside Shang so he can access their states later()
They used this same tech in the arcade for MK4, but since they used 3D models and motion captures skeletons, they used to make Shinnok, instead of morphing into the characters, he could access their skeletons states while using his own sounds.