You're off on #3. There were realms before the creation of Mundus. The Anuad mentions the twelve worlds of creation and Vehk mentions them in general. Though considering the et'Ada are their plane(t), that there were et'Ada means there were planets.
I always thought of those twelve worlds to be the equivalent of the "Kalpas" of Nordic myth, where the world was made out of small pieces of the previous ones. Only in the Anuad's case, it is made from the shattered pieces of worlds that existed as the same time.
edit: What I mean is that things did exist before the creation of Mundis, but not in the same kalpa or "timeline."
Off course, I cannot argue with the et'ada thing. Especially since the rest of the et'Ada left suspiciously plane(t) formed holes in the sky. :foodndrink:
u are also off at number 2. the other princes cursed jyggalag with maddness b/c they feared the power he was gaining, and thus he becomes sheogorath. his head tells u this after u beat him.
Not really (or rather, only). If we build upon the original story (where Sheograth is "symbolising" the madness of Anuil/Lorkhan), instead of simply retconning it, then Jyggalag could easily be interpreted as a manifestation of Anuil/Lorkhans peace-of-mind, his sanity (and his order).
Then the "cursing" of Jyggalag into Sheogorath would be explained by Anuil/Lorkhan "going insane".
Myths varies depending on who it is that tells them. I wouldn't say Jyggalag is any more credible than the rest.