Actually providing information on the idea would be ideal in order to recieve the feedback you want.
It will be an extra to my City of Balmora mod, as in 'true' Hlaalu Expansion. The Hlaalu are true rich fat cats and occupied the western Gash at the height of Gnaar Mok, at the feet of Redoran and just some cells north of Caldera. It will be a fortified city but less important trade hub. Even so it will have quite some merchants Hlaalu style.
If you look at the http://images.uesp.net/2/24/MW-map-Great_House_Influence.jpg you see that the spot is logical.
As for lore I am still thinking...
I will be glad to answer specific questions