Middle-class enclaves of racial utopia?
Leyawin: Argonians vs. Khajit vs. Cyrodils.
Cheydinhal: Dunmer vs. Orcs vs. Cyrodils
Bruma: Tensions between Colovian, Nibeney, and Nordic culture
Imperial City: Decadent nobility in Talos Plaza (including two vampires, a crazy Ayleid, possibly more), Strife between the lower classes and the upper classes (via the Guard and the Thieves Guild), etc.
Sure, communities were hardly homogeneous, but what can you expect after thousands of years of forced imperial integration?
As to the climate, I still insist that you can't have an entire continent (Atmora) freeze over without having some cooling in Tamriel, as well.
Oh right...why do Khajiit lick their butts? To get the taste of Khajiit cooking out of their mouths! HAHA, how racist! Dunmer hate Imperials. Whoops, Lord Indarys sits on the throne and Garrus Darelliun helps to get Ulrich Leland into custody. Bruma, Nords are drunken barbarians and Imperials are a pious and studious but anol lot. Whoopee! Strife between middle classes? Hey, let's play Robin Hood. No, let's get the one with the anthropomorphic fox!
Haha...talk about racial tensions!