A recent interview with TESO's gaming staff revealed that time travel would come into play with a very early quest.
Apparently the daggerfall's opening quest include time traveling back in time 150 years from TESO's present to an breton island occupied by orcs. At the time the island was destroyed by a weapon of mass destruction made by the bretons. You the time traveler have been sent back in time to retrieve or disable the bomb. (The orcs of daggerfall want you to destroy it, they apparently didn't appreciate being bombed)
Now I get that there is time tears but at no point do i remember really interacting with the stuff there so you can't really say its the same thing.
At the point they begin introducing time travel to change stuff in the original lore doesn't that mean that this isn't the original time line? That it's a completely different string of events? It's own universe with it's own continuity? If that's the case wouldn't that free them up to do anything they want with the world from then on? They could make their own narrative and open up the world to more sandboxxy elements as well.
It's kinda like a comic book retcon, there's the original and still ongoing elder scrolls universe from the games and then there's an offshoot retcon universe where time travel changed something seemingly small but directly effects the course of the universe from there on.