That's not even my problem. The Ayleids are called "Wild Elves" not "Nazi Elves". They were supposed to be living in a tribal system populating the forests of Cyrodill (which were also conveniently removed). For all their talk about hating Oblivion, the mainstream boys seem to not have a problem with the way Aylleids were portrayed in Oblivion, which was a horrible and lore-breaking.
It's called a retcon.
Pretty much. I can't speak for anyone else, but as a Doctor Who fan in my youth (Jon Pertwee and Tom Baker FTW) I'm all for retcons if they serve the interests of the series. Or really, more accurately, just my own interest and entertainment. I would have liked truly wild Wild Elves eking out a miserable existence in the forests of Cyrodiil. But as for giving up what's been written more recently and going back to Daggerfall's race of mystery wood elves, why would anyone want to do that? The info on the Ayleids was about the only worldbuilding Oblivion did, and most wasn't all that bad.