I agree that once your a master of something you should be able to do something incredible but just not flinging people about like rag dolls, it's just not in the lore and is something you might think of one of the tribunal being able to do. Now, say you can pick up bigger and bigger things because when you become a master of alteration it reduces the speed at which your magicka drains from weight so you can pick up a nice sized boulder or some cart or something, I don't know, but just not picking people up and flicking them like a booger.
Edit: However I would be fine with being able to levitating someone with the limitations on levitate that I explained above. It's just that if you could pick up someone with telekinesis, then you could hold them in place while you beat them to death with your sword or blast them with spells. It would just turn into an overpowered spell like levitation used to be.
I don't want to be that guy but... if it's in the lore that you can't lift living beings I'd like to see a little proof and just as soon as I'm done writing this I'll go looking for myself (just to show I'm not lazy
). Also, if it's never been done before it makes more sense that it's a limitation of the technology at the time the games were made rather than a lore issue unless there's a specific reference in the lore which states it (fairly) clear. I don't want to fling someone a 1000 feet away but I sure would like to lift some bandit up and drop him off a cliff as I think that'd be hilarious.
later....
I found in the lore that telekinesis seems to only be used on "objects". It didn't give any reason but it never mentioned having previously been used on people or creatures. However it never states that you CAN'T use it on people and if you think about how mysticism works it seems likely that it would be possible given the use of teleportation and other mysticism effects work on people just fine.