From what lore I`ve read (in Morrowind) no one knows why the Dwarves vanished. Some say it was due to some technologicaly they created that backfired on them, others that the gods got angry with their obstinacy in trying to be like gods. For all we know, they teleported themselves onto another planet by mistake!
There are people studying the Dwemer and their stuff, but I`ve not seen anyone try to use anything of theirs except their swords and armour.
I think the real test would come if someone actually REPLICATED or MADE a technological advancement? would the gods then notice and suddenly clamp down on them? Or let them do it?
Of course, this is alll supposition in story. In truth its up to Bethesda writer`s to decide. i would hope that they would make it so the gods are preventing technology from taking hold as it makes the most sense.
The Tamriel gods are the divine intervention type, but such overt intervention goes beyond the purview of most deities I would think.
I mean, we are basically saying that the gods, as soon as they see someone developing something technological, remove the influence in such a way as to discourage any sort of investigation or re initiation of the project in question.
That seems a bit too... direct. I mean, with polytheistic pantheons like we have in Nirn, you have duties split up amongst many different entities. The issue here, is that for something so overwhelmingly final to take place, many separate entities governing many different variables would need work in tandem, and I don't just mean in one pantheon. You have to consider the duality of the TES Pantheon. By this I mean, wouldn't it be in, for example, sheograth's best interests to cause mass disruption with something like guns... especially if it would even cause chaos amongst his rivals? What about Molag, don't you think he'd be all down with that wholesale slaughter thing? Now, why would those two examples be
totally powerless to act against their Aedra adversaries?
Plus, there are perfectly good forces dissuading technological development in the history of Nirn. The loss of Dwemer civilization seems a pretty good motivator, as does the argument that has been presented about the stability of the currency system...
Also, your forgetting utility. Would there be innovation in technology? Yes. Where would it be though? There exists a force powerful enough to evolve along it's own lines, can level cities, kill people, cure disease, raise the dead... etc. Technological innovation would be in fields like agriculture, metallurgy... etc. Why? Because those fields are such that they have the need for greater advances to support a population no longer held in check by the forces magic can counter. Technology is developed as a means of addressing a problem. Sometimes, the problems just don't exist to warrent the development of tech. The incan empire didn't use the Wheel. Does that mean they were idiots? No, they lived in mountainous country, so carts were next to useless to them. Why would you develop a whole new technology to address a niche that is already filled by something that is constantly expanding it's scope in use and destructive capability... it's a step backwards. Looking at the: "Because everyone can use it arguement:" well... that makes a bit more sense... but then development would be driven by those few people who needed stuff like that: Bandits or the like. And... your forgetting that gun developments were slow. Gunpowder and cannons were created early in the middle ages... but firearms? We didn't see those until many many years later. Who is to say that we don't have some sort of early firearms in Tamriel? Your not going to see flintlock pistols for another many hundred, to 1000 years, but the items would be used by specialists only, and would be Rare.
Also... It could be argued that Tamriel is going through the dark ages right now what with all that collapsing empire nonsense. The dark ages in Europe lasted 1000 years. 1000, that is less time than the TES series has eaten out of Tamriel's history. Further, while innovation happened in the dark ages, it was isolated to certain areas, the majority of people remained unaffected. If you were a dirt farmer in the Black Forest in 1100, you likely did much the same thing your ancestors did in 100.