Listen man, if I saw a person kill AND absorb the soul of a dragon, whether or not they are on my undesired list, I assure you this person, cat, lizard, or orc would have no problems from me.
Doesnt really help when youre not doing the main quest, now does it?
No, this is just lazyness. No-one even reacts to you no matter what race you are.
Other races were obviously an afterthought.
There are barely any Khajit, Argonians, or even elves for that matter.
The game is meant to be full of Nords for that 'Conan' feel, so they screwed up their own lore.
Lore-wise, Skyrim has been a part of the Empire for a very long time and that is has less racial diversity than Morrowind (Which was only open for colonisation for 200 years) is a design decision that makes no sense and tramples on a great part of their own lore (racial diversity).