Nords make the most sense, but all races live in Skyrim, with the exception of possible Khajiit everybody could have a reason for joining any particulair faction. Though it's definitely true that most would be more inclined to join the Empire instead of the Stormcloacks there is something to be said for people joining both factions, even when joining the Rebels there is no real hatred for somebody who isn't a Nord, you're just frowned upon. The same applied to Morrowind, you weren't a native so you weren't as important. None of the great houses loved you at first, and the ashlander tribes were certainly cautious of a foreign Nerevarine... Still everybody could have a very good reason for wanting to join one side or another, I see no real problem there.
In Summerset it would be different however, the Isles have from what I can gather pretty much kicked out all non Thalmor and place a heavy preference on Altmer where Bosmer are second, Khajiit are probably allowed but then regarded as third rate citizens and the rest can kiss their ass. There would be no logical way for an Imperial, Nord, Dunmmer, Redguard, Breton, etc. to walk around there and be anything important or you know walk around there and not be hunted down on first sight by some Thalmor agent.
True in Skyrim, not true in a place where every none Dominion race would preferably be killed on sight by the very government... There is no way you could start out as a small time ex-convict in a place like that.
It not impossible. In fact, I'd say it's being set up, especially with all the comments in-game about the next Great War.
Titus Mede II isn't an idiot, which may be a departure from previous emperors. The Empire's legions isn't spread out over large portions of land like in the past. Hammerfell is still part of the Empire, just sort of a flux auxullary state rather than an actual province, and many HATE the Thalmor (this is due to the White-Gold Concordat). The people of Valenwood and Elswyre have issue with the Thalmor if all the genocide/ethnic cleansing reports are true (considering the Thalmor agents you meet in game, it probably is). You could say Skyrim's loss hurts the Empire, but that is one possibility; it could still be a province, or Titus II could strike a deal with the Stormcloaks to give greater autonomy and say in the Imperial Court as long they submit to Imperial taxes and law.
Then there's the whole Psijic Order and their enmity with the Thalmor.
All this means is that when the next Great War happens, it looks like things are
really staked against the Dominion.
Cue TES: VI, showing a different Summerset Isle. The Dominion has lost, and
badly at that. The Altmer, who aren't a really populous race to begin with, are feeling strain and are weary from war. The Thalmor are only a shade of what they were a few years past in Summerset, and non existent outside of the island. Cue the next player character, caught between Altmer who want to return to the Empire, Altmer who want total Independence from the Empire and the Thalmor, and the Thalmor themselves, who have their own goals.
You can have a whole rise of Auri-El thing just so dragons can once again feature prominently (and more importantly get beefed up).
If this is true, it'll be Summerset, or Valenwood.