So I haven't finished the quest because I don't know who to believe. Are the Alik'r really assassins sent by the Aldmer Dominion or is it true that Saadia sold her country out to the Dominion and they want to bring her in for that?

Thats for you to decide trust a group of assasins or a sweet innocent barmaid?? lol

that is for you to decide based on the info you have.

someone went through a 'theory' that seemed fairly plausible that seemed to indicate Saadia could not possibly be telling the truth. that thread is long gone though. read as much info as you can (books), and talk to as many people as you can looking for holes in their stories or things not matching up.

So it doesn't explicitly say who is lying? That's what I was afraid of, oh well, I guess I'll go with my gut then.

The Alik'r will take her back to court or at least say so, does not fit well with the bloodthirsty assassins she describe them as.
However if you kill them you get their gear.

I also run into some Alik'r who was questioning an Redguard woman along the road as an random encounter.

I find the Alik'r's story more believable. It just seems weird that they would lie about resisting the Thalmor. If they were working for the Thalmor, (assuming the Thalmor would let them work directly in their name), then they'd have to operate from the shadows. Unless the Alik'r are acting as a double-agent group of sorts, but that just seems overly complex (i.e. the simple solution is usually the right one).

On the other hand, Saadia is a refugee in a land full of elf-haters. It's easier for her to lie about why she is on the run (I spoke out against the elves) and get by than it is to say that you betrayed the local resistance fronts. Also, I tend to side with the Redguard resistance groups, Redguard pride ftw.

The truth will probably never be stated explicitly, but I find the Alik'r's story more believable than Saadia's.

What resistance groups? The Redguards forced the Dominion out of Hammerfell, and as far as we know don't take orders from the Thalmor like the Imperial government does.

I remember Kematu(sp?) saying something to the effect of, "the resistance lives on" at the end of the quest. Now that could mean a few different things or I may have simply misheard.