There's precedent for Cyrodiil losing its border cities. I think it happened to Rimmen, and Falkreath was lost as well. Also, the Remanada speaks of Colovian city-states, like Sarchal and Delodiil, which don't appear on present day maps. Mir Corrup and Artemon are two more unspecified cities. So, Colovian city-states rose and fell often. But, it appears Sutch was retconed to Hammerfell, very close to release; because there is no Sutch on Hammerfell's map and there is no mention in the 3rd Edition Pocket Guide, of falling to them. The Thief of Virtue never gives a date.
Anyway, TOYB and ModMan, you were not the subjects of my rant.
Huh? I didn't think I was the subject of anyone's rant -http://www.gamesas.com/index.php?/topic/1095144-city-of-sutch/page__view__findpost__p__15992819, just my theory on the state of Sutch is that the 'Fort Sutch' of Oblivion are the remains of the city, which isn't even a retcon, as there's no lore that Sutch survived late into the Third Era anyway, and like you've just said, and which I first brought up, the borders of Colovia were prone to moving about (which explains the Hammerfell reference, which is a very small reference, compared to alot more substantial lore putting it in Cyrodiil, including two maps (though one being a beta map)) -a sad loss to Lore as Sutch could have been a cool city in Oblivion, but it still stands as one of the best answers to the situation (also, think of it this way, Sutch could easily be brought back in another game at the site, with a backstory like the city being refounded, and rebuilt over the old ruins).
However, one thing I will add, is that Bethesda most definetly would have concepts for the city, architecture, city plans (like the ones for the other cities found on the Collector's Edition bonus CD) -given Sutch survived substantially into the development of Oblivion, I think it would be a real treat if Bethesda actually released these to the community