My personal theory is that he is Dragonborn, and turned into a dragon by channeling Akatosh like Martin Septim.
The general theory is that his story is a parallel for Auriel's. The Altmer wish to transcend Mundus; Auriel is the first and only one to accomplish it. The Akaviri wish to become dragons; Tosh Raka is the first and only one to accomplish it. Both just happen to be leaders, both just happen to be mirror-brothers.
Basically, 'transcend' is to an Altmer what 'become a dragon' is to an Akaviri.