What is the difference between the Nibenese and Colovians, apart from Colovians living in the north and Nibenese living in the south?

Colovians are dumb... Nah, just joking

Not much, they never suceeded in really getting that "split" in Oblivion. There is only some people SAYING that there is a split, but your character will have a hard time finding them... But the southerners got Skooma.

The http://www.imperial-library.info/content/pocket-guide-empire-first-edition-cyrodiil provides the best summary.

The Nibenese live around the Niben region, which is to say the are around Lake Rumare and downwards into Cyrodiil's panhandle. The Colovians are west of that, reaching up into Hammerfell in ancient times. The Nibenese are more elven in blood and custom, while the Colovians are more Nordic.

Who are the Cheydinhallers then? Colovians or Nibenese?

I think they're considered to be Nibenese, though in "Oblivion" it's pointed out that Cheydinhal has also been influenced by proximity to the Dunmer.

Maybe the difference between the two Nordic peoples is similar to the difference between Lowland Scots and Highlanders.

Hm... kay...

Can't comment on the RL aspect, but I do want to underscore the point that someone from Anvil and someone from Kvatch won't be the same type of person, despite them both being Colovian.

It's actually East-West not North-South. Colovian West and Nibenian East. From what people say in the game, Colovians are tough & straight foward while Nibenians are more Byzantine bu those are generalizations. I think there was a big cultural difference before the 3rd era, but time has changed things and their cultures have sought of intermingled to a significant degree.

EDIT: I think the only visible consistent evidence of any differences is the architecture. Going into the varied customs, social or otherwise I think would require Sims level detail for the game. This where the Lore can help detail the specific differences that the games won't go into.

Or, ya' know, Morrowind level detail for the game.