Hardly. This is a world of Gods and magic. A world where you can go naked in a blizzard. Why not have handcannons? It would open up an entire new playstyle to the rogue, and not necessarily break lore; a new artifact of Hermaeus Mora, a lost invention of the Dwemer, black powder as invented by an alchemist...
Exactly we have gods and magic, why would someone feel the need for an inacurate and loud firearm, when you can throw a fireball?
And the Dwemer were good with magic, so of all races why would they invent it?
We did have some explosives in one Morrowind quest, but that's it.
So why have a handcannon in the first place, nobody needs it and besides if you look at how much technology and inventions (such as throwing weapons, spears, crossbows etc.) that have disappeared, why would they suddenly discover something new?
And as for the quest mentioned in the OP, there is no point in making a gun just to destroy it.