It's natural that people judge each other by the appearance, personally I think it's accpectable as long as they are not being mean by it and should respect the truth when they know differently.
I am a British Chinese, do you know how many people presume I am from China? And how people make Kung Fu sound when they see me? You can't blame them cos they probably brought up from places where they could only see Chinese people from books.
They could make a dialogue that allowing you to answer, however the role of this relationship is quite small in the story, I can understand they just make a statement instead of a conversation.
If you are offended by this, there are a lot more things you could be upset about from the rest of the game.
Same here, I'm Norwegian-Sami and people use to ask me if I ride on raindeer and can joik and such.
True, it is harder to recognise Sami by appearence, but we mostly kept to ourself so we usually have some distinct features.
We were originally an Asian tribe that wandered westwards, and some stuff like eyes and cheekbones are different from most Norwegians at least.
OT: He saw you as an Argonian and assumed you were from Argonia. Big deal.
Most of you were called back and tranced by the Hist anyway during the Oblivion Crisis.