The Redorans don't fight for glory. They fight to protect. And die to protect. The Nord invaders understand only one language; violence. The only way to stop them is to fight them off. And all the houses, especially Telvanni and Hlaalu, engage in killing fellow nobles for stupid insults. Except Redoran, instead of hiring an assassin or stabbing them in the back themselves, allow for a fair duel. Of course, Bolvyn Venim wasn't exactly a model Redoran. But every house has a few bad eggs. Hlaalu, Dres, and Telvanni much more than others.
I have played as a Redoran several times. Most of the quests involve rescues, killing monsters that are threatening people, fighting bandits, and dealing with Hlaalu's troublemaking.
A bit late, but I have to nit-pick: About the bolded part, I get the feeling that you think the duels would somehow be more "honourable" than the assasinations, and that makes sense seen from a European-Western real world point of view, but in Morrowind, assasinations is the honourable way.
I don't know, if you talk with the guards and the legion, they show they much prefer Redoran over Hlaalu. And again, the Imperials do not partake or get involved in house wars. So, unless an imperial held place was directly attacked by a great house, there would not be any imperial involvement.
If there was to break out a full civil war in Morrowind, then the Empire would interfer and try to bring "peace" to the lands so the important Morrowind trade can continue. They would support Helseth and Hlaalu because they are the ones who rules the country, and if they supported Redoran, they would indirectly support and encourage rebellious forces all over Tamriell. In the Empire's current state, all such threats to (allied) authority would have to taken care of fast and completly, for the Empire is weak enough as it is.
Anyway, on another point:
If within a year of the challenge, the marked noble still lives, the challenging House must publicly forego any further complaint or scandal on the matter.
Is it just me, or does this not recemble the Telvanni attitude of "If you attack someone and survive/steal something and get away then you haven't done anything wrong" very, very much?
And at last, a example that money isn't everything: http://en.wikipedia.org/wiki/Crassus#Crassus_in_Syria, one of Rome's richest men. (I don't like how they try to undermine the "molten gold" part's veraciousness, because that's just so cool it
must have happened
)
Anyway, to the point: Money is one of the most important parts of warfare, in fact, the second most important, but money doesn't matter at all if you're general can't lead his armies. The greater general always wins (:rolleyes:).
However, I do not think it is known which one of House Hlaalu/Dres and Redoran that has the best generals.