So... how about the Sumps being a mini-Dreamsleeve? That Vuhon's quite well-read.
It strikes to me that, assuming the inhabitants of Umbriel are in fact Daedra (which, residing in the realm of Clavicus Vile, is more than likely), that the sump is in fact their "Wellspring"- the point where they return to the World after they die (as we learned about in Shivering Isles).
I believe that Annaig and Gilm becoming inhabitants of Umbriel- Daedra- is a sign of "Walk like them until they must walk like you". The two acted like Daedra, therefore they became Daedra.
Also, I'm trying to chart a logical course of destruction of Morrowind, to determine how much is relatively undamaged. If we can surmise that Skyrim is undamaged, we can get a range of damage. Now, the southern coast of the Inner Sea is far less mountainous than the western coast, so tsunamis could reach a lot farther inland, but we also have to take into account how much water is in the Inner Sea.
In addition, we know that Umbriel moves at a rate of sixty miles per day. We know that Gilm knows that they are "well over Morrowind" based only on the ashen wasteland beneath him. They're either one or two days away from Scathing Bay at that point, therefore we can chart that the destruction extends at least that far, probably further. And we know that southern Morrowind is inhabitable, though we don't know what is termed "southern Morrowind".
I'm going to hypothesize that Mournhold, Narsis, Tear survived the tsunamis and ash fall, though they were probably hit by some pretty serious earthquakes. Necrom was located to the east, and if Nirn operates on at least similar principles to our world, judging that it gets colder north and warmer south, Tamriel is in the northern hemisphere of Nirn, and the prevailing winds go west to east, therefore Necrom and the Telvanni Isles are buried under ash.
Of course, we also know that any surviving settlements were then sacked by the Argonians and the survivors fled north to Solstheim.
I'll work on a map of Morrowind to post somewhere that shows what I'm conjecturing.