I had this one mod awhile ago that I no longer have and am trying to find it again. It added a sewer system to balmora and the entrance to it was on the left side of the river (if your standing right in front of the temple). Inside there were a bunch of daedra and at the end of the dungeon there was a room that contained a special amulet.

This amulet would teleport you to different areas, but before it would teleport you to your destination you'd be sent to a black cell and you were surrounded by red smoke and skeletons and one twilight daedra (It was supposed to be simulating oblivion or hell I guess) and you'd be stuck there for about 10 seconds then you were transported to your destination.

Anybody know what mod this was from? I could really use some help finding it, thanks.

I think I found the mod :

http://planetelderscrolls.gamespy.com/View.php?view=Mods.Detail&id=171052&id=5420

The teleport device does sound very close to your description.