Sorry if I'm being blind to the obvious, but why on earth would the Daedric commanders and Mankar bother attacking Morrowind? If they know the heir to the throne is somewhere in the Imperial province, why would they not simply focus there? Morrowind is far away and the heir wouldn't have been able to get there anyway. Also, it seems a bit stupid to me to attack Kvatch first. Sure, it was where Martin was, but surely it would have made more sense to attack from the heart of the Empire - the Imperial City. That way, they could have spread out all across Cyrodiil eventually and soon killed off the heir, and there would have been no chance of lighting the Dragon Fires as that area would have been heavily occupied and destroyed by the Daedric forces
Dagon wishes to retake Tamriel as a whole, killing Martin is just a means to stop the gates from closing. Morrowind probably has the largest army outside the legions, they, with their telvanni magelords and Redoran soldiers, not to mention the fanatical troops of Indoril, represent a major military threat to the daedra.
And they didn't attack Kvatch first. The Dawn attacked the imperial city first, to kill the emperor and alow the gates to open. With the emperor and his other heirs dead, the most tactical decision would be to move on to the next city that bears the last dragonblood, and that means Kvatch. Kvatch is also a big [censored] you to Akatosh, it has morale wrecking value, kinda like kidnapping Vivec and smashing Ghostgate. "We'll do what Dagoth couldn't!"
The imperial city is ridiculously fortified, even a surprise attack would be put down quickly by the standing legion and the House guards. The one that took place was a desperate last ditch attempt to stop the lighting. If Dagon hadn't showed up, it would have been over even quicker. Remember, any dawnsmen that start trying to open a gate in the middle of the temple district are going to get themselves killed before they can do anything.