Like taking up an entire reasonably sized island?
It would make a great trading hub, great expanse on some story lines like Ysolda's.
It wouldn't be a hold, but it wouldn't be ruled by a hold, kind've independent from Skyrim but involved with skyrim.
It'dbe a great place for a lotttttta quests and internal politics and clashing houses, etc. etc. etc.
Like solitude x 3
I don't see why not, if there's a reason why not, please, do tell.