A pact which is no longer in force as of the Oblivion crisis and the end of the Septim dynasty. The Medes are merely hangers-on to that legacy.
The empire didn't do anything to try to stop it. Nor did they lift a finger to prevent the invasion of Morrowind by Argonians. The empire has lost any legitimacy it had to rule.
Yes they did, they resisted and failed. The Argonians overwhelmed the Legionnaires remaining in Morrowind and Black Marsh, as did the Thalmor in Valenwood. As I understand it, the Khajiit chose to side with the Thalmor. How would forcibly reclaiming Elsweyr be a noble thing but reclaiming Skyrim be wrong?
And Skyrim is home to the Snow Tower, and High Rock is home to the Adamantine Tower. What of it? Cyrodiil doesn't need to rule over its neighbors in order to fight with them against a common enemy.
For all the good those two towers did during the Oblivion Crisis. There's a reason the Ayleids built White Gold Tower there: it's in the center of the wheel. The storm patterns during the Stormcrown Interregnum show that even after the Oblivion Crisis, it is anything but inactive.
And I do believe it is best in the long run to be united under a common government and fighting force as opposed to a bunch of seperate nations working together against a common foe, both in terms of defeating the Thalmor and what comes after. If a bunch of nations defeat the Dominion, they're free to go back to hating each other and fighting over territory and other such stuff. Plus there's the issue that a bunch of nations teamed up wouldn't be able to conquer the Dominion, they'd only be able to crush it and hope that it doesn't rebuild any time soon. If the Empire leads the way to defeating the Dominion, it'll not only redeem the Empire in the eyes of many, but it'll mean that in the very least, there will be lasting peace between Skyrim, Cyrodiil, High Rock, and whatever provinces they happened to conquer in the process.