Where did I mention 'coolness'? I was simply stating that wizard-lords as old as the Tribunal itself could at least hold off the argonians. This is ecspecially before they were able to get to port Telvannis, with them going through the Beothian and Velothi mountains where the geographic location would seriously disadvantage the argonians.
And where's the Imperial legion? With Morrowind being part of the Empire, and Black Marsh seceding, the garrisions in Old Ebonheart, Firewatch, and Helnim would naturally aid the Dark Elves.
Bethesda seriously needs to expand on this, an undetailed journal and some in-game rumors is REALLY not enough information for all of this.

Titus Mede was still consolidating his power in Cyrodiil and working on keeping the Nibeneans in line. A distant province whose main benefit to the empire (its ebony mines) had just been wiped out probably wasn't a high priority for him.

Well I was talking about the legions already in Cyrodiil, such as in Old ebonheart, Firewatch, and Helnim, and the gerrisions across the cities in Mournhold and such.
Only ebony? No sir, you must not discard the famous Telvanni bug Musk

To the OP: who knows but one thing is clear: the fact that Vvardenfell was destroyed isn't the end of the island. Why? Because of the freaking writer's imagination. If I'm a writer I could blow up the whole universe and bring it back with some witty story. Even the cheesiest writer can write something like this, " Within the ash bathed landscape of the great Dunmer landscape, a single patch of life(Fire Fern) manage to slowly sculpt the landscape which gave other life a.....blah, blah, blah."

First off, Vvardenfell wasn't "destroyed". The cities and settlements on the island were, either from the immediate eruption or the crashing of Baar Dau into Vivec City, creating the Scathing Bay. Once the lava cooled, plant life probably started to return to the island, but with a lot less animals since they were likely killed in the Red Year. Sure, the island would have been uninhabitable for some time, but it is by no means "destroyed".

See also: ohbuggritwhat'sthatvolcanointheUS? It isn't mt. St. helens, is it? The one that basically imploded and then like six monthl after a pyroclastic ash flow blasted the surrounding area it was green and living again?

I see. I guess this site has it all wrong:

http://www.uesp.net/wiki/Lore:Fourth_Era

In that instance, yes, because the two books have the protagonists visit the ruins of Vivec in the Scathing Bay. UESP is also full of contradictions in terms of Vvardenfell's "destruction". See the following examples that claim otherwise with regards to Vvardenfell's "destruction":

Reference to the newly created Scathing Bay:
http://www.uesp.net/wiki/Books:Places#Scathing_Bay

Claiming that Red Mountain erupted after Baar Dau crashed and the island was covered in ash:
http://www.uesp.net/wiki/Lore:Vvardenfell

Red Mountain:
http://www.uesp.net/wiki/Lore:Red_Mountain

Morrowind:
http://www.uesp.net/wiki/Lore:Morrowind

I think I'll go with the numerous references that say the island was not destroyed than go with the singular epithet that says it was.

Morrowind was first weakended by the Oblivion Crisis. How many great Telvnni wizards could have fallen fending off the hords of Oblivion? How many fortifications could have been destoryed? The Argonians fended off the Dremora so well A few years after the crisis Red Mountain erupts covering the surface of the Vanderfell in ash and fire. If you recall the Telvanni's were busy building as many towers through out the island as possible in order to expand its holdings. The eruption would undoubtly cause some tidal waves which could deal considerble damage to every port city in Morrowind providing plenty of new avenues for an aquatic race to attack. Really Port Telvannis is vunerable to Argonians by being a port to begin with. Its quite difficult to fortify a functioning port against a race that breathes underwater. The members of the House themselves were traditionally isolationists and made there homes along the coasts. Which again massive volcanic eruption triggers tidal waves and your tower is now in a swamp for the next few years. Not a fun place to be when Argonians are invading and any slaves you have left likely see that army as liberators.

I swear people seem to worship the Televanni like they were gods.

Titus Mede I didn't come to power until long after the Argonian invasion.

I wrote my thoughts on the Telvanni in a thread in the Skyrim general forum.
Ill reprint it here:

The Telvanni were not so much a house united on all fronts like house Redoran (remember Redoran, never forget)
as they were more akin to ancient Greece, more or less independant city-states.
Certainly every mage-lord ruled his demesne as he saw fit, and the covenants of house Telvanni practically encourage usurpation.
They state that if a Telvanni can get away with stealing from a Telvanni, he deserves his loot, and if he managed to kill another Telvanni mage-lord he is clearly the superior and deserves his holdings.
Right through might.

This attitude naturally led to individualism among the mage-lords and their personalities and interests were far more diverse than that of a more united house, such as the trading and politicking Hlaalu.

I have no doubt that some of the more excentric mage-lords like Dratha or Therana will have fallen.
Someone like Aryon might have perished defending the people of Tel Vos that he loved.

But someone like Demnevanni or Fyr?
They would have survived.

There must be reclusive, powerful mage-lords out there, especially on the mainlands, who would have continued their own projects and simply didnt care about the Argonian invasion.
Buried their tower or otherwise made it unseeable or inaccessible.
The city-state nature of the house, where each mage-lord more or less rules its own kingdom, would have contributed to the demise of the house proper, the fall of Telvannis, but at the same time would have ensured that at least some mage-lords came out of the war relatively unscathed.
As I said, I think some of the more private ones probably wont even have noticed the house is no more.
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As for the destruction of Morrowind: http://en.wikipedia.org/wiki/Apoptosis