Do you think we will see Orcs in Morrowind, or Nords down on the beaches of Summerset isles? Who draws the line on who and who can't enter their province?

What do you guys think?

Good question.
There'll no doubt be mixed NPCs scattered around the world, it's pretty much necessary to ward off the staleness of seeing just 3 races all the time.

I image that you'll simply see less of, say Orcs in Skyim or Altmer in High Rock; and the ones that you DO see will likely either avoid the topic or cover it with some 'I was born here' back story.

Seeing only nords in Skyrim, Dunmer in Morrowind and Argonians in Black marsh would bore me to death!

I expect we will be killing enemy faction npcs in our territories.

This is probably gonna be the case. I see no reason why they wouldn't have NPCs from other races in the faction zones, both friendly and hostile.

Both enemy and hostile and the same thing. You might want to learn the difference before you get ambushed by some Khajiit high on Moon Sugar!

Oops! I meant friendly! Already edited, thanks for pointing out.