I would agree with you if they had a choice. They had to agree to the terms or face destruction. The Empire can make a come back. Just because the Thalmor are overseeing things doesn't mean the Empire is helpless. Do you honestly believe the Empire couldn't make secret plans.
Did they, really? I've said it before, but it bears repeating: the Thalmor armies were eradicated in the battles for the IC and at Stros M'Kai, so there is no basis in fact for the claims that the Empire risked destruction if it refused to sign the WGC. Yes, the Legions were pretty much trashed, however there is no indication that the Thalmor still have any land forces whatsoever. Granted there is a nigh-total lack of intelligence concerning the actual current troop strength of the Dominion, however I'd be willing to bet it's nowhere near what a lot of people claim; after all, if they
were still that powerful they wouldn't have bothered offering a treaty since they could have rolled the Empire at will.
@L33ty:
There's no such provision, to my knowledge, however in feudal systems the nobility is generally 'off limits' unless they do something really egregious. Also, the ones in areas the Thalmor have access to are Empire loyalists, so carting them off would be considered an act of war regardless of their validity as targets.