How about a compromise when you begin the game you have the option of being more human or beast like?
NWN(Neverwinter Nights) 2 had this. You chose a race(Human, Dwarven, Orcish, Elvin, or Halfling) than chose a subrace. Elves was Moon, Sun, Drow, and Wild.
I could easily see choosing you race then subrace in TES.
Elf, Argonian, Human.
Then Elf branches into Orc, Dunmer, Altmer, and Bosmer.
Human branches into Nord, Imperial, Redguard, and Breton.
Khajiit and Argonian Branches into those various breeds: Oblivion Style, Morrowind Style, Human/Mer-like with beast features like spines, ears and Tail.
The benefits would be mostly Aesthetics.
But What I see here is Warrior(Orc), Mage(Altmer), Theif(Bosmer), and NonSpecialized Class(Dunmer) types.
I put in brackets beside each class the Mer/Elvin Subrace that corresponds with the class. If you get where I'm going.