Why we can't have dwemer
"Kagrenac was devoted to his people, and the Dwarves, despite what you may have read, were a pious lot-he would not have sacrificed so many of their golden souls to create Anumidum's metal body if it were all in the name of grand theater. Kagrenac had even built the tools needed to construct a Mantella, the Crux of Transcendence."
Okay. So now everyone can stop posting about where the Dwarves went. I TOLD YOU EIGHTY YEARS AGO.
Filthy with it, I am.
In short, they became the Numidium, a time ignoring machine god. Having them return would require a deus ex machine larger than the Numidium, and would remove all sense of mystic and mystery. In addition, they're more alien than the Saxhleel (argonians) by a longshot. Having them in would wreck a good segment of lore that makes TES unique.
As for half elves, bretons would be the closest thing. http://www.imperial-library.info/content/notes-racial-phylogeny-and-biology.