I have to say that I almost prefer the Falmer as the mythical elves of ages past, as presented in Bloodmoon. At least compared to what we got in Skyrim. No real diss here, it's just that why couldn't they just have put Rieklings in their stead? Although Rieklings might have been native to Solstheim, I can't remember... But you get the point.
Throughout the years of Elder Scrolls, we've gone through plenty of Goblin-like races. Goblins, Rieklings, Grummites. I'm probably missing a few here, but I just liked the Falmer more before they became "the goblins of Skyrim" I guess.
In Solstheim not much was known about the Falmer yet, in fact you could do some quests for a high elf in Raven Rock who'd come to study those little snow goblins, to see if they were related to the Falmer in any way.. That was.. 200 or 300 years ago..?
In fact, those recent books in Skyrim might have been written by that high elf based on his research? Don't remember his name.
And oh yeah, the Dwarves were some pretty evil bastards.