The only reason the world has existed as long as it has is because of Talos. He holds back the next kalpa. Gods need worship to be able to retain their power. The ban of Talos worship is what allowed Alduin to reawaken. The empire nearly destroyed the world by allowing that term. Mede didn't know it of course, but his acceptance of the concordat was more than the thalmor could have hoped for in that situation.
2nd. The entire thalmor attack force was wiped out at red ring. The one at Hammerfell was the only remaining one(And that one was defeated 5 years later) There was no need to sign the concordat.
3rd. Mede is a terrible leader that doesn't understand how to handle anything but Cyrodiil. It's better to have several allied independant nations than one supernation that can't coordinate.(And trust me, the redguards and nords would ally in a heartbeat to take on the thalmor. They'd welcome just about any race to join the fight.)
Oh and the fourth thing. The nords of whiterun have no problem with elves that actually try to fit in. There's a high elf running a stall in the marketplace doing just fine for herself because she didn't show up expecting a handout. Another elf actually living in the grey quarters confirms this. The grey quarter elves are mostly from great houses and were used to special treatement. You can go to any other stormcloak city and see plenty of non nords doing fine for themselves because they aren't being pompous asses.
Whiterun isn't a stormcloak city, and only a few of the elves in windhelm's gray quarter are from good houses. The majority are refugees from a home that was destroyed.
Also the storm cloaks are racist and will allow bandits to kill any non-nords while will come to the rescue of nords.

