Oh, and one small catch with the Dunmer/Argonian love you guys have got going on -- the Dunmer didn't flee Morrowind because of the eruption or meteor (not entirely, anyway), they fled because the Argonians came in and wiped most of them out. While it's possible for two small factions to get along, I doubt you could create an entire city with the two races cohabiting. The Redoran likely wouldn't forgive the Argonians, while the Telvanni still prefer them to be slaves. The Hlaalu would most likely try to turn the place into another Solitude as well. I really don't see how it would work.
And thats where you as player comes in. You can either show them that in their current circumstances (of being outcasts in Skyrim, the war above, Thalmor, Dragons), peace would be a better option and help like-minded wise Dunmer and Argonians to positions of power. Or you can just let them continue their war and help one of them win.
In Oblivion there was Bleakers Way, a community of Nords and Dunmer. Nords and Elves are even more prejudiced towards eachother. So somehow both families made peace in that village. So why can't an Argonian and Dunmer group make peace (with some help)?
The Dunmer also refuse to believe in the Eight/Nine Divines, preferring to worship the Daedric princes. That could be a fairly big theme, with Justicars, and maybe even Vigilants, trying to raid the place (and also a reason for not adding shrines to the Aedra).
Good point.
This could be handled in an 'expansion' or their could be made a small shrine to them for eventual Divine worshiping Dunmer/Argonians.
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Here are also a few other points by me:
* The non-Argonian hist issue: the solution is just to say an alchemist found a way to remove the nasty side effects from the potion.
* I went through all three ruins and it occurred to me that the outside zones are much more ruined than the inside zones. They also seem to be more trapped. I really could not see them being turned into residential areas. Alftand had a little bit more potential, but the real residential potential starts at the second zones. Like I mentioned before at the Dwemer market post, the first zones can be used to keep potential threats out.
* Other races: While the main community might exist out of Dunmer and Argonians, its plausible that there are also members of other races that want to escape the surface, due to circumstances. Will they also be included?