But what of the Thalmor's interpretation? Have I understood them correctly?
I am currently digesting as much of the Lore as possible; however, it is all new to me and will take time. I trust that you will be gentle with me
The Thalmor have a philosophy that is most certainly not Existentialist, and is probably best likened to Gnosticism.
Philosophy is really the underpinnings of all other knowledge, as philosophy is, to generalize it to its most basic form, the way in which you try to understand anything that happens in the world around you. Our entire understanding of such a thing existing called "science", for example, (in the Western tradition) is thanks to the http://en.wikipedia.org/wiki/Phusis, which were the first people who thought that trying to understand the patterns of how nature actually works would give you insight into understanding how nature will work again in the future, instead of just assuming that every rain storm was just an inexplicable act of the gods, or that all natural disasters were the wrath of the heavens, for which we must give sacrifices to the gods to appease them. Without taking the time to stop and think that reality can be understood, it is impossible to make much progress in understanding it.
The Thalmor have a completely alien philosophy - whereas an Existentialist sees growth and learning and self-determination as ultimately good, and where even pain and suffering grant meaning to existence, and as such, are valuable for making you a stronger person for having overcome adversity, the Thalmor have a belief where time and existence and mortality are corruptions of their original pre-creation point.
I would point you back to this post I made earlier in the thread: http://www.gamesas.com/index.php?/topic/1296865-talos-hero-or-villain/page__view__findpost__p__19576513
Sorry if it's a little tl;dr, but it's basically the Cliff's Notes version of the first two weeks of a Western Philosophy 101 course just as an intro into discussing the divergent path of philosophy that the Thalmor seem most connected to.