As much as I'd like for the Eye to be connected with or equal Kinmune, it doesn't match up temporally, given what clues are present in said writing... though trying to establish any degree of concrete temporality in dealing with beings outside of linear time probably relegates me to the servants of the Madgod.
It was this last act that doomed her to becoming one of the Arena’s most feared villains. High King Ysgramor took the loss of the Dumb Old Giant, one of his greatest counselors outside of Torc and Talking-Belt, with great anger, and sent his Thanes and Shield-Biters against her, equipped with great relics and enchanted weapons of wasabi. And though the fight was hard, the champions of the Altmora managed to seal Kinmune beneath the always-burnt borders of Sarthaal, imprisoning her in its prismatic network of misunderstood dwemercraft.
By the time Kinmune is imprisoned within Saarthal, the city's already been destroyed.. and apparently Ysgramor built it ontop of dwemer/falmer ruins and we've yet to see the bottom of the rabbit-hole, but that doesn't make much sense either. Also, who do Torc and Talking-Belt refer to?
Then again, the Night of Tears, taken with Kinmune, can either add or detract from the argument's plausibility.
The Nords found something when they built their city, buried deep in the ground. They attempted to keep it buried, but the elves learned of it and coveted it for themselves. Thus they assaulted Saarthal, their goal not to drive the Nords out but to secure this power for themselves. I believe Ysgramor knew something of what the elves would find under Saarthal, and rallied together his people to keep the elves from gaining it. When Nords once again controlled Skyrim, this power was buried deep below the earth and sealed away.
So, at this point, Ysgramor -could- have already beaten and entombed Kinmune, and was attempting to make sure she didn't fall into elven hands... But then we have to go back to KINMUNE proper, where she frees herself and wanders off to cyrodiil.
:brokencomputer:
Edit: "one of the arena's most feared villains." Do we have any ancient thu'um wielding witches? Or just 'scary-evil-females?'