This problem isn't to do with lore or gameplay mechanics, it's just poor story design. Make the main characters retarded so you can justify the existence of a conflict that needs solving. There wouldn't be much substance to the Mage's Guild storyline if Traven didn't ban necromancy and persecute its practitioners, for example.
That's just it, the reason the Champion of Cyrodiil, and many characters in the game, may sometimes come off as stupid is often because the plot requires it, though in some places, it could have been avoided if Bethesda had simply provided an alternate solution to quests that acknowledges the player has perceived the deception, but still allowing you to complete the quest.