I think Hammerfell is a independent state and pretty much the legion can be used to aid one political faction against another in a armed conflict.
Not when Orsinium was sacked it wasn't.
Barring any details, I like to believe it went down like this: Wayrest and Orsinium ally with each other pre-Oblivion crisis. During Oblivion crisis, King Gothryd is kidnapped into Oblivion, weakening the throne. With the Empire falling apart, Wayrest and Orsinium take advantage of Daggerfall's weakness and seize large holdings. With the rising power of a fourth influence in the Illiac, Daggerfall and Sentinel ally to fight Wayrest and Orsinium. Gortwog finally dies at the venerable age of 50, creating the power-vacuum needed for Wayrest to betray Orsinium and rally with Daggerfall and Sentinel. Wayrest has to give up some of it's gains back to Daggerfall, but gains Orsinium's old holdings (and mines). This pins the sack at somewhere around 4E25.
This theory gives Elysanna loads of credit though.