Wait what? Let's get our context straight. In the Lore, Vvardenfell is almost as big as Skyrim. Morrowind as a province is bigger.
In the game Morrowind versus the game Skyrim, Vvardenfell is about as big as the entire province of Skyrim.
In the game Skyrim versus the game Skyrim, Vvardenfell is this very small shadow of itself, smaller than it should be, or was. It would, like you say, probably fit in the Pale or the Rift with ease. That tells me that they weren't going for realism or use, but for looks.
What are you even saying?
In terms of physical size, Vvardenfell from Morrowind is approximately one-third the size of Skyrim. In Lore, Vvardenfell should be about the size of Skyrim. The scale used in Skyrim is irrelevant. Honestly, if Vvardenfell in Skyrim was as big as it's Supposed to be (IE, about the size of Skyrim) I'd have an easier time believing it's "Just for show".
The fact that it appears Smaller in Skyrim could mean something, it could also mean, and probably means absolutely nothing. My point is, scale, except for outliers, is irrelevent for Proof. That's why I was focusing on Mundane details you wouldn't normally place if it was just an aesthetic asset.
All this is kind of pointless, because I still think this is related to RAGE.