So you would've fought and died against the Argonian horde. You were ageless, not immortal. A sharp, pointy thing going through your body would take you down just as fast as anyone else.
The Nerevarine was never portrayed to be a god that can stand up to anything fate throws their way.
And the Dunmer (some of them, anyway) did know Lie Rock was going to be a problem. That's why they built the Ingenium.
You aren't a god, but you defeat an immensely powerful sorcerer (Dagoth Ur), avoid a divine sorcerer (Dagoth Ur when trying to break the enchantments on the heart, etc..), own immensely powerful artifacts, and have basically talked a majority of the people in Morrowind into accepting you as the Nerevarine with help from Moon-and-Star, another powerful artifact in its own right.
The Argonian armies were probably fairly large, but nothing on the scale that closed off the Oblivion gates. The Hist were never mentioned to have sent the Argonians to Morrowind (they seem to be the self-preservation type, really). Would it have been difficult to hold them off? Sure. Would it have been impossible? No, not at all.
Yeah, that's my point. They knew it was going to happen, so it isn't like it should have been able to take out a large chunk of the population. Even with the Ingenium, I doubt people would have continued on as normal. The same goes for Red Mountain. The Dunmer likely knew it was going to erupt and were prepared for it. The Argonian invasion sure was a kick in the side, but I still don't see it as being something the people of Morrowind couldn't have handled, especially with the reincarnation of Nerevar leading them (same guy who led the Chimer and Dwemer to victory over the Nord invaders).