On the other hand, the Redoran are crushed by the Nord attack, and the Indoril are demoralized by the "depotheosis" of the Tribunal.
Then you've got the Daedric invasion. Which had (supposedly) everyone a bit too preoccupied by immediate survival than by political maneuvering. It could be a unifying factor for the Empire, since it was in a way legitimized by the attack. A "damn, it's really the Cyrodiilic Empire that matters" since Dagon's plan needed the end of the Septim bloodline to start; and was thwarted by the Lost Heir's act. Also, nothing unites like a common enemy, and the Daedra hordes were just that for all the mortals of Tamriel.
Of course, the crisis is over now. This is now a new era. Things won't be the same as ever before. And all that stuff that's not going to make traditionalist factions look especially relevant. So, House Dres did a smart choice -- even if a difficult one -- by getting on the Hlaalu bandwagon. Morrowind's never going to be Resdayn anymore anyway.