I think it was because it had more of a presence in Morrowind because of the slavery and smuggling.
That's true - and Imperials often seemed to be heavily involved with or controlling the smuggling and slave trading rings also ... The Thieves Guild were not exactly Angels ... and they had people messing with skooma, right? Also smuggling ... and the smugglers often carried skooma.
I came accross both slaver and smugglers caves that had Imperials in charge as well as working as guards etc - and of the Dunmer the Hlaalu were the guys most often involved (until actual delivery of slaves for public sale was made) as well as being the 'Imperial' aligned Dunmer House ... I never saw Dres - maybe because Dres handed over the slaves to Hlaalu for transhipment through Hlaalu and Imperial areas?
For a scam to work you need deniability - and the slaving and other smuggling provided a screen for delivery of the real product.
Once the Emperor is dead Helseth has freedom and a need to break Hlaalu links with that scheme and thereby strengthen his own power.