There is a reason why Winterhold is as empty as it is. If there should be an exception to flourishing cities as the OP stated, Winterhold should be that exception.
Winterhold was obviously cut due to time constraints.
Thats why this whole 'falling into the sea' disaster was invented, and why you cant investigate it and why there arent any quests involved with that.
Its just glaringly obvious.
They didnt have time, cut it down to two houses and invented a reason.
Same as the cut city in Oblivion, near fort Sutch.