Nerevar was apparently the King of Resdayn or something which was made up of the Chimer and Nords or something if I recall, so he had a connection to them which in that view sort of could be an explanation reincarnating as a Nord.
But Morrowind expects you to be a Dark Elf no matter how you look at it, Nerevarine Incarnates only make sense as Dark elves (The False incarnate was a Dark Elf too).
The interesting thing is, that the Failed Incarnates apparently didn't know the Prophecies that stated the Nerevarine was an 'outlander'. Peakstar and the others were all native Dunmer, so they should have realized they were all False Incarnates.
Anyway, an Argonian/Nord/Khajiit Nerevarine is preferable for me as it really puts all those arrogant, xenophobic Dunmer that probably called you 'outlander' a million times throughout the game, firmly in their place.
I would just like to ask, IF nobody seemed to take the threat of Dagoth Ur and the prophecies seriously, then wouldn't that make people even less likely to allow a hortator, let alone an outlander one? As far as I could tell, that was a pretty desperate move, and just casually allowing some ex-con outlander to become your overlord might not exactly make sense.
They had nothing to lose by sending somebody alone into Red Mountain, had they?