Septims empire is long gone, the current empire is the mede empire, it have had a large group of strong rulers but the rather unfortunate circumstances in the provinces have weakened it.

He'd likely kill the current Emperor in single combat and take over the Empire, then reconquer the world.

Neither. If he came back then
1. He'd end the war therefore no Stormcloaks
2. He'd probably be trying to rebuild a new empire.
3. Busy stomping the Dominion by himself

If he had to make the choice it'd be with the Empire. More than likely he'd just rule it rather than simply 'side' with it.

Tiber would support the stormcloaks and kick the empire out. At some point, he'd cut the throat of Ulfric and Galmar and usurp control. He would then proceed to threaten the other nations into cooperation with his "new empire" or rain wonderful violence down upon them until they agreed.

This, or any other way where he assumes full control over one of the factions.

Tiber Septim was a leader and I think he would be leading the Imperials against the Thalmor and the Nords would be following.

What the Empire needs is a new stronger leader like him who can win back the hearts and respect of the Stormcloak Nords and also the Redguards

Perhaps he was refering to the end of the Septim line of the 3rd era. The people of Tamriel seem to see the different eras as different Empires.

1st Nordic Empire was founded by Ysgramor (5000 years ago I think)
1st Cyrodilic Empire was founded by Alessia (The Slave Queen) and founded what is often called the First Empire which started the first era
1st era ended when Emperor Reman III was assassinated by Versidue-Shaie who ruled as Potentate

2nd era began when Versidue-Shaie began his rule as the Potentate of the Empire.

Tiber Septim commands the Cyrodilic army and navy to bring Tamriel's independent states into Imperial provinces. The Emperor at that time was assassinated and Tiber Septim basically had run of the Empire though he was not crowned Emperor until after he enacts the truce between Cyrodil and Morrowind.

3rd era began when Tiber Septim enacted the truce between Cyrodil and Morrowind and was crowned Emperor, thus starting the Septim line and the 3rd era.

3rd era ended when Martin Septim sacrificed himself to end the Oblivion Crisis.

If Tiber Septim would show up and everyone knew without question that he is indeed Tiber Septim, they wouldn't raise their weapon to the man who became their god.

I am not sure who he would support. Of course, Wulf said the Empire was getting old in Morrowind, but Talos is more than just Tiber Septim and the other parts of Talos might not be too fond of the Empire. Wulfharth was betrayed by Tiber if the Arcturian Heresy is true, as well as the fact that Tiber chose a peaceful way to incorporate Morrowind instead of trying to destroy the Tribunal.
This Wulf character may or may not be affected by the likely hatred from Wulfhart.

Of course, I doubt he would be too proud of the Empire as it is, but he may not be too fond of the Stormcloaks either. That said, Ulfric seems to have some traits in common with Tiber so he may support him.

Tiber Septim would side with both; first he would Yor tuul shul the White Gold Concordant back into Oblivion and then Ulfric would recognize him as the ruler of the Empire and Skyrim's armies. The Dominion would send their fleet and with one mighty shout Tiber Septim would send their fleet to the ocean bottom. The Imperial legion under Tiber Septim would burn Elsweyr and Valenwood to the ground in a fortnight and the mighty Thalmor would bow to the ground at his feet in surrender, but Tiber Septim would refuse their surrender. With a second mighty shout he would plunge all of Summerset into the ocean depths and bring peace to the Empire.

I could be exaggerating in parts though...

Nah, fairly accurate...

Thats what comes to mind? Being spanked with a wooden spoon? I see how your mind works

Tiber Septim could not destroy the Tribunal. During his attempts to conquer Morrowind, he had many victories, but just as many defeats. Whenever the Tribunal themselves were on the battlefield, his forces lost that battle. It basically ended in a stalemate, and both Tiber Septim and the Tribunal tired of it. Vivec offered a treaty to Tiber Septim, which made Morrowind part of the Empire, but allowed it to retain complete autonomy and self-governance (Hence the slavery in Morrowind). Then Vivec gave Tiber Septim the Numidium as a gift to seal the treaty. Numidium lacked a power source however (considering it was originally to be powered by the Heart of Lorkhan, which Vivec would not give for obvious reasons).

Tiber Septim had his Imperial Battlemage, Zurin Arctus, create the Mantella and Totem. The Mantella was an incredibly powerful soulgem capable of powering the Numidium, while the Totem was the means to control the Numidium. Tiber Septim then betrayed Zurin Arctus, and slew him, then used his soul to power the Mantella. Tiber Septim then used Numidium to conquer the rest of Tamriel. However, Zurin Arctus' body rose in undeath, as a Lich, and attempted to regain his soul from the Mantella, blowing Numidium to pieces, and sending the Mantella (along with his soul trapped inside it) to Aetherius. His body was destroyed in the process, but reconstituted itself every few centuries, henceforth Zurin Arctus became known as the Underking. The Underking (Zurin Arctus) was able to regain his soul and finally slip into true death during the events of the Warp in the West (All possible endings of TES II: Daggerfall happened), when the PC character of TES II: Daggerfall returned the Mantella to the Underking.

a lot of people would, remember, hes the hero god of men.