at what point between the events of Daggerfall and the events of Morrowind (earlier in the 3rd era?), did the Khajit become cats???

(quote from Daggerfall)
"Khajiit hail from the province of Elsweyr ... Many Khajiit have taken to painting their faces to more resemble their legendary feline cousins, the predatory cats that hunt the great desert."

Is this a gaping lore-hole?