A flawed comparison. The narrative and the world at large are not the same things. If the game doesn't let you have multiple start points, then by this game mechanic it also informs the idea that the narrative only ever starts in one place and with one character. To give a comparison, Geralt of Rivia will always be taken to Kaer Morhen at the start of the witcher, the Lone Wanderer will always live most of his life in Vault 101, and the Courier will always be shot in the head. There's no alternative ways to the start the game, and thus this narrative and gameplay choice informs us that these are the adventures of this one specific guy, in this specific situation. This isn't X3: Terran conflict, where the player character could be the poisoned paranid, the argon patriot, the terran fighter pilot, or the humble merchant. (and thus, one can seriously debate which of those people did which plots) Oblivion has one start, and thus there can be only one protagonist. To give another example, In Dragon Age Awakening, there's two different people who could of done it. Either the Orlesian Warden or the Warden from the base game, but that choice only exists because Awakening allows you to start fresh off with the Orlesian Warden. A gameplay choice made at character creation informs the narrative.
See above, you are missing the point. The gameplay choice of allowing only one protagonist who starts in one specific place informs the narrative that the prisoner is the only hero of Oblivion and it's DLC and expansion.
Lore wise, there are restrictions. First off, that hypothetical cell mate empirically does not exist. Secondly, Farwil Indarys is simply never even implied to have known about the niben portal. It requires abuses of game to conclude he is a candidate. While the portal was an open invitation, the game strictly narrows things down so that the only possible protagonist is the Prisoner. It is important that you cannot start in multiple places.
Assuming he is talking metaphorically is an absurd neglect of obvious authorial intent.
I disagree on several key points.
You assume that the only person to pass through that portal is the prisoner.
Since the portal was not in the prison, but on an island in the centre of the province, this is manifestly not so.
I also disagree that there was no hypothetical cellmate. This is unknown, as it is not mentioned anywhere that there was or was not.
The game is not the world.
Why would Farwel Indarys not know about the portal?
Hes a noble with access to all sorts of information.
Cyrodiil sports a newspaper.
That he does not know
in game is putting the cart before the horse. The game is not the world and in the world of Oblivion there is no reason to assume a well-off man cannot afford to be well informed.
What is the definitive reason that the prisoner
has to be the one who went through the portal and defeated Jyggalag?
A lore reason, something in the world, not a gameplay reason of something in the game.
I do not think there are any, unless I have overlooked something.
The portal was there. It was an open invitation smack in the middle of the Imperial province and for all we know Divayth Fyr heard about it via dreamsleeve communication and decided to smite an obscure Daedra and mantle one himself.
As for authorial intent, no again I disagree.
I would say its a bit of the opposite actually, as Im not assigning any authorial intent but rather taking things at face value and there is nothing in the text of Sheogorath in Skyrim that allows one to objectively conclude as a certainty that he is the CoC.
There is also nothing to conclude there arent any hidden layers, double meanings or metaphorical godspeak.
There may be hints, there may be suggestions, but there is no
proof and I believe that this is intentional, as TES events are always ambiguous when it comes to the player characters.
To say: and in the last year of the third era the Champion of Cyrodiil, who also was the Gray Fox and the Archmage, became the madgod, goes against the principles of TES lore in my opinion.
There are events we can say happened with carying degrees of certainty but I think it is unlikely from a storytelling point of view, from a realistic point of view and simply boring and therefore wrong to conclude that the hero character was the head of All guilds and performed All great feats achieved during the timespan of the game.