Does anyone know if the Dreugh are intelligant? or are they just a mere beast?

they look like somthing that would be quite intelligant.

I believe the Dreugh in Morrowind are supposed to have an intelligenbt civilisation, but the land dreugh in Oblivion are mere beasts.

why was this moved?

Your question has a better chance of being answered here.

The presence of the Dreugh Warlord in Morrowind could indicate that there is a specific social hierarchy between Dreughs. However, how much into depth goes this we cannot judge. Whether there is a system how to become a warlord or simply the most powerful individual emerges as a one, we can only guess.

However, this is just speculation, the Dreugh Warlord is there only because Bethseda needed a special name for a stronger Dreugh than the normal ones.

http://www.imperial-library.info/mwbooks/lessons.shtml#28. It is possible this is meant to be taken metaphorically.

The dreugh seen in Morrowind and Daggerfall are in their aquatic state, whereas the Dreugh in Oblivion are undergoing karvinasim, a terrestrial period which lasts about a year. (Karvinasim comes from http://www.imperial-library.info/obbooks/2920.shtml, but unfortunately I forget which book.)

It also calls the the "Altmer of the Sea." Does this mean they are descended from an Elven race that became increasingly aquatic?

It might refer to the Aldmer being the dominant land based species. The Dreugh being their aquatic counter part.

Maybe they are intelligent beasts, nobody said beasts can't be smart...