Why? It's not so simple to me. I was considering adding some Dwemer Ruins to Solstheim, but I wanted to make sure. Theoretically, anyway, could the Dwemer have survived there?
-JKS
They could have, but I doubt they would have bothered.
Reasons:
1). Mythically speaking, the Lost Race
niche is already taken by the Falmer.
2). Considering that the http://tvtropes.org/pmwiki/pmwiki.php/Main/FantasticRacism Nords were supposed to have eradicated the Falmer in Solstheim, and given that the Dwemer were supposed to be smart, is it likely that they would have settled there?
(Yes, I know the Nords were also in Morrowind).
3). Dwemer technology seems to go together with volcanism (Redguard, Morrowind). Do you see a lot of that in Solstheim?