In past games, it would seem every Hero of Tamriel is a convict who miraculously escapes jail/death for 'reasons'.

Do you think TESO will have convicts-turned-heroes running around?

I hope not.

If each race has its own starter area then it would stretch credulity to have nine different scenarios/backstories where each given race was imprisoned under different circumstances and then released to quest in their own little home area.

But, if there's a single starting area per faction it wouldn't be hard to imagine (if you were a member of the Daggerfall Covenant) to be on a prison ship with a bunch of Orc, Redguard, and Breton criminals, at which point you get shipwrecked, or the boat docks and you're processed and released, etc. And this would be the rational for why you start at the same place, no matter which race you pick within a given faction.

No, they've already told us that everyone is A) part of the military of their faction and had their soul taken by Molag Bal. That's where/how you start the game, most likely in Molag Bal's plane of Oblivion.

So we're quite literally, all, soul-less meat-shields.

Good luck building a unique character off of that.

Well, when you put it that way...lol.

I guess the idea is that you're supposed to be a blank slate, like how you start in the single player TES games. I'm not sure I like the soulless thing but we'll see.

Perhaps you're a prisoner who is released under the condition that they serve in their faction's army? This could fulfil the developers motives and preserve the player's discretion.