This theory is inspired by that of ahttp://www.reddit.com/r/teslore/comments/2cub2s/the_forbidden_theory_the_definitive_dwarforc/, who got quite lambasted for it over there. Though there were some big holes and complications, I thought the general idea may actually have some merit in explaining a few longstanding questions about the Battle of Red Mountain. It's still a crackpot theory, but hopefully the following will demonstrate its plausibility. Let's also keep in mind that the events of Red Mountain were shrouded in a Dragon Break, followed by an entirely rewritten history courtesy of the Tribunal. Not only that, but most tales of the event are Dunmeri propaganda, and the defeated party is not in any position to give their tale. Any theory of these events will therefore have natural contradictions and anachronisms.

In the book "The Changed Ones", an obvious parallel is intended between the creation of the Orcs and the Creation of Dunmer. It suggests that the Dunmer colour change - usually attributed to the Battle of Red Mountain - occurred at the time of the Orcs' creation ("He demonstrated the right way to wear their skin"). Perhaps they were given the name Chimer - Changed People - because they too experienced a literal physical change at the time of Trinimac's defeat. What if the Orcs were created at Red Mountain, and the advent of the Chimer and the advent of the Dunmer are in fact two versions of the same event? After all, Dunmer means "cursed", and Malacath is the god of curses.

"The Changed Ones," from this perspective, is an allegorical description of the sundering of the Dwemer-Dunmer alliance and the ringing of the heart. Azura, Boethiah, and Mephala (http://www.imperial-library.info/content/skyrim-five-songs-king-wulfharth) lead the Dunmer people against their kin. Dumac and the non-erased Dwemer people take on the role of Trinimac - opposing the Dunmeri worldview and reawakening the tone of the Heart's removal. The Nord histories still remember who played which roles.

As we know, the Battle of Red Mountain was a re-enactment of the dawn which took place within a dragon break. Amongst the many other myth-echos, we have the Dwemer playing upon the heart to become one with a robotic Lorkhan stand-in. The experiment's intent is to remove themselves in the image of the missing god, and leave behind an engine of further world-refusal. However, like good scientists, they leave behind a control group. This is the Rourken clan who opposed allegiance with the Chimer in the first place.

So the Dwemer are removed, along with the entire cultural identity of Dwemeris. The survivors, no longer Dwarves per se, fuse mythically with the last action of their people - removing. http://www.imperial-library.info/sites/default/files/forum_archives/Made_Up_Word_Round_Up.html, the people of its torturer become identified with Trinimac-the-Sunderer, remover of the heart. Dumac, who thanks to myth-roles and broken time has become Trinimac, is soon slain by Nerevar-who-is-Boethiah. The remainder of Dumac's people (The Rouken Control Group) become the orcs. Malacath is born. This is where the Boethiah-ate-Trinimac legend comes from.

Red Mountain erupts. The Nords who were present attribute this to Malouch's Rage at what has happened, and give him the sobriquet http://www.uesp.net/wiki/Lore:Varieties_of_Faith:_The_Nords. Alandro/Nerevar/Dagoth are later slain/supplanted by the tribunal, creating the anticipations schema. They re-write history, erasing most of what has occurred.

As for the Rourken, they flee, taking Volendrung and flinging it into the western skies. Whether thanks to the red moment or numidial shennanigans, this weapon rips straight through spacetime. http://www.imperial-library.info/content/notes-redguard-history, and so-called "Giant Goblins" pour out. This is Daggerfall's "Goblin Gate". They spread over the west coast throughout time,http://www.imperial-library.info/content/compilation-redguard-history. Eventually they come into conflict with Ragada, Bretons, Chimer, and Nords, outsiders as ever, and inextricably linked to Trinimac/Malacath. As the echoes of the red moment fade, they continue to live as reclusive stoic metalworkers, but all traces of Dwemeri culture is gone - it was removed from the pattern of possibility along with the Numidial Dwemer. They forge ahead with a brand new identity, centered on Malacath. Volendrung, tool of his people's escape, becomes an artifact of Malacath, thus explaining http://www.imperial-library.info/content/what-volendrung about why the hammer is a daedric artifact.

tl;dr

What Happened:

-The Rourken were the control group in the Numidium experiment

-Kagrenac rang the tone of the heart's removal

-The Dwemer were fused to the image of Lorkhan-Numidium and went missing

-The Rourken were fused to the myth-echo of the heart-remover-Trinimac

-Dwemer cultural identity is unmade

-Survivors of both sides of the war were physically changed

-The Rourken-Orcs flung Volendrung over Hammerfell

-A tear in spacetime occurs over Hammerfell, spilling "Giant Goblins"

-Orcs populate the west, retaining little trace of their former culture

What it Explains:

-Why Volendrung is an artifact of Malacath

-Why Dumac is called Dumalacath and Dwarf-Orc

-Why the eruption of Red Mountain is blamed on Malouch's rage

-What the Orcs were doing at Red Mountain

-Why the Chimer were called Chimer before any obvious physical change

-Why "The Changed Ones" implies that the Dunmer's skin changed after Trinimac's defeat

-What's with the "Goblin Gate"?

Very interesting. The only hang up I can think of is the Rourken clan already having inhabited Hammerfell before the Battle of Red Mountain. They did leave behind their ruins and animunculi. If the Rourken clan was indeed transformed during the Battle of Red Mountain, how would that explain said ruins?

This is a really neat idea... and it all kind of fits if you squint hard enough. The clues are all there... although is there any other explanation for the Dwarf-Orc title?

The only thought I have for it is why would it be Dumac that takes the role of Trinimac? If we are appealing to the identity of one of the Dwemer as the ones who tortured the Heart of Lorkhan, surely the myth-echo would be Kagrenac, who (from other accounts of the Battle, it's true) was likely the most usual user of the Tools with the Heart? Unless we posit Dumac and Kagrenac as the same person, but then we have Yagrum as a problem, who knew Kagrenach personally and didn't identify the two. Of course, unless we identify the Dwemer people as the offending party, and Dumac as their representative via his kingship... but I'm sceptical of that approach as being too impersonal.

But it would make it fit, I think.

That is true, however I'm positing that Volendrung created the goblin gate, which is known to have opened into several first-era timepoints. That doesn't explain the ruins however, so we'd have to posit one of the following: 1. Hammerfell was settled prior to the dragonbreak, and the dwarf-orcs attacked their past selves. 2. The memory of Dwarven culture was more of a slow decline rather than instantaneous, allowing the dwarf-orcs to build for a few generations before forgetting their cultural identity, and when the ragada found the orcs milling about in the old ruins, they assumed they had driven out the dwarves. 3. In the dragonbreak of the red moment, the Rourken were paradoxically both dwarves and orcs, allowing them to simulatiously build Volenfell civilization and tear it down in an instant.

I can't think of any other Dwarf-Orc explanation that's been put forward, though of course I'm sure other explanations could be devised. You are right about Kagrenac, however he manipulated the heart for the effect he desired - and that was to disappear with the rest of the Dwarves. The remaining Dwemer became attached to Trinimac/Malacath - outsiders, those now without a people. As their king, Dumac became Dumalacath.

Interesting. What do you make of Martin's comment about Malacath being one of the most bitter foes of the Dwemer?

Ah that's interesting, where does he say that?

Malacath's people are those left behind - the Dwemer are the ones who abandoned them. And Malacath never forgets.

It's during the "Blood of the Daedra" questline. He says the following when you choose to destroy Volendrung:

I really wouldn't take that Volendrung as an example as multiple items throughout Tamrielic history end up under a Daedric prince, for example Goldbrand and spell breaker.

True, but Volendrung's daedric nature is specifically phrased as a mystery. See Martin's quote above or the book, "What is Volendrung?" We are supposed to wonder.

Well, the way I see it is that occasionally a cultist would get a legendary artifact and offer it to their chosen lord, which makes a lot of sense given some of the artifacts we get from the princes.