The Elder Scrolls brushed over Caula Voria's role during the 10 years that Jagar Tharn was impersonating Uriel Septim VII, and afterwards (per lore she was so traumatized that she exiled herself to a country estate and was never seen or heard of in the game again).
I think that during the 10 years Jagar Tharn was impersonating Uriel, it was obvious that he also fooled Caula, since she didn't say anything to stop it. In other words, she and Jagar lived as man and wife during those 10 years. Yes, I know things weren't good in the marriage with Uriel by then, but there are two possible explainations:
1. Jagar Tharn didn't know they were not getting along and would have (in order to fool Caula) slept with her. Caula, in an effort to keep her hold over Uriel would have slept with him to get him back in her power, especially if it meant having another child to bind him further
or
2. Caula knew it wasn't Uriel, (was in fact Uriel's great enemy). Caula would do anything to torment Uriel, what better way than to sleep with his enemy, and perfectly legally as everyone thought it was Uriel. She never thought he would return from Oblivion, and so felt she would never be found out. Every day she was with Tharn she was (in her mind) twisting the knife in Uriel.
(choose which one you prefer)
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So she has a child by Jagar Tharn and is raising him as a Septim till the point where Uriel is rescued from Oblivion by the unknown Hero. At this time, she has been exposed. Whether she knew beforehand or not is immaterial, it would be obvious to all of Tamriel that this child was concieved while the real Uriel was in Oblivion being held prisoner by the man she created the child with. She had to flee to the country, and Uriel never had another thing to do with her.
The years raising Jagar's son, banished from the rich life she had always craved, Caula plots her revenge against Uriel.
When Uriel and his 3 legitimate sons are killed in Oblivion, Caula is left without the ability to take revenge on Uriel anymore, so her hatred of all those years flames into a rage. Jagar's son is Evil and Cunning like his father, and has inherited some of Jagar's immense power, although not honed to their full ability due to being raised only by Caula. This child also has Caula's lifelong teachings of anger against Tamriel, which banished them.
Jagar's son stays with his mother till her death, and then he travels to Tamriel to wreak his revenge on it.
He joins the Mages guild, where he comes in contact with Casta Scribbona, who is a tremendously powerful mage, unbeknownst to anyone. (she uses her novel writing as a front). Casta sees the great power of Jagar's son, and takes over honing that power and developing it.
**
Jagar's son sets out to wreak havoc on Tamriel, while Casta Scribbona stays in the background, helpful to him while still maintaining her front of being just a writer and friend of the Mage's Guild.
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This is just a rough outline of the First Act. I have the full story written from beginning to end. What do you think of my idea?
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Rough Draft: Act Two (More background info)
Uriel VII had an older brother Fancar. Fancar should have proceeded to the throne by rights. When Fancar turned 18 he fell in love with a girl of another race, much to the displeasure of his father Pelagius Septim IV. Pelagius forbid Fancar to continue seeing the girl, so Fancar eloped. He returned and confronted his father already wed. Pelagius threw Fancar and his bride from the house in a rage, and went to the Records of Birth and ripped out the page that gave poof of Fancar's birth and place in the family tree. He stormed into his library and began drinking heavily.
The housekeeper, who had helped raise both boys, saw everything that had happened. When Pelagius left the parlor, she ran to the fireplace and rescued the documents and hid them. From that day on, Fancar's name was never to be mentioned in the house, it was forbidden.
When Pelagius died, it was Uriel VII that had to step up to take the crown. Uriel loved his brother, and also loved his father; but he had to obey Pelagius rule, and so he took his seat as the new Emporer. (we all know the rest of Uriel's part in the story)
***
Fancar and his wife moved far away from Tamriel. Although they were happy together, their union never produced a child, and then Fancar's wife became ill. She was ill a very long time. Fancar hired a nurse to come in and care for his wife. The nurse was a beautiful young Imperial girl, and Fancar ended up having an affair with her, and affair which produced a child. She kept her pregnancy hidden as long as possible, and then had to stop coming in to nurse Fancar's wife. She moved away to a small town where no one knew her and gave birth to a son. The midwife that attended the birth was originally from Tamriel, and in the child's face she recognized the Septim lineage.
Fancar sent his Man-at-Arms to search for his beloved nurse when she disappeared. The Man-at-Arms came back and gave Fancar a handwritten note with the name of the midwife, and the town Fancar's girlfriend had moved to.
***
Several months after Uriel Septim VII and his sons were killed by the Mythic Dawn, Fancar was murdered in his home by Mythic Dawn agents. When the young nurse heard of Fancar's murder she panicked for the safety of her young baby, and fled in the night to the Midwife's (her only friend in town) brother's house in a small village of Blankenship in a far away place called Cyrodiil. There she was raising her son. The neighbors and brother of the midwife all helped teach Fancar's son how to hunt and fight when he was growing up. He was a natural warrior. When Fancar's son reached the age to learn a trade, his mother sent him to the Mage's Guild for his studies.
When Fancar's son first came to the Arcane University, the Arch Mage (player) felt he looked familiar but could not place him. Tar Meena had the same feeling, but neither of them could place why he looked familiar. The Arch Mage felt instinctively that he should protect this child; so placed Tar Meena directly in charge of the child's studies and well being.
***
The Mythic Dawn had taken over Fancar's house ever since his death. For years they used it as a stop-over, to hide out when moving thru that area. Seventeen years afer Fancar's murder, a Mythic Dawn was moving the furniture in the bedroom to suit his needs and noticed a small place in the floor that didn't look right. He pushed and prodded, and then finally with the tip of his sword wedged into the board he managed to pry the board up. Inside he found the note with the Midwife's information. This was carried immediately to their leader, who sent out eight of his best assasins.
The midwife's family was tortured, and then finally gave up the information of the brother in Cyrodiil. The Mythic Dawn killed the midwife and her family, and reported back to their leader. They were sent out again to go to Blankenship in Cyrodiil and find out more.
***
Blankenship being a small village, eight people hanging around suddenly was suspicious, especially asking questions of the villagers. The child's mother instinctively knew it was danger. She waited till the dark of night and sneaked out thru the woods and then cut back to the road and ran all the way to the Imperial City to warn her son.
The next day the Mythic Dawn held the midwife's brother in his house and tortured him. He finally told them about the mother and child. Once again the agents returned to their leader for instructions. This time, there would not be only eight going.
***
So now the Player is the Arch Mage, the Main Character (Fancar's son, the last of the Septims) has joined the Mage's Guild, and Jagar's son has joined the Mages Guild. The Mythic Dawn will be heading to the Arcane University to assassinate the child. Jagar's son will want to assassinate the child when he finds out there is one, and the (Arch Mage) Player is going to be standing in the middle. (in other words, an all out epic melee Mage War takes place in the Third Act).