Also, my mind can't help but wander to the ... practicalities of the event. Nasty stuff, but who can tell why elves do anything?
Good points. These are not easy questions, if you enjoy and love the Dark Elves, then pointing these lens of perception inwards is hard and testing. And means that it is the right thing to do. It is my personal belief that Boethiah tests in this way; deception, murder and treachery are simply tools that engender the greater testing of ourselves, the ones that come with hindsight. What purer example of this is the story of the Tribunal?
I don't know whether Nerevar would have agreed. Nerevar is special, and that is why this is a martyrdom, and not just another casualty. You could argue he was a naive to trust Dagoth Ur with the tools, foolish to put his life in the hands of his councillors, and out of touch with the culture of his people by doing these things. This is not to say that the murder was just or anything short of foul, but makes it less than unexpected.