I know it ended at Red Mountain but it will rise again. There is a strategic point to Morrowind. It can lead to Black Marsh and completly surrond the Empire who is weak as well. With them concentrating their efforts in Skyrim, surrounding them would be very adventagious
Trifling with the Hist is a bad idea, and no one can really enter deep into Blackmarsh as is. The Altmer can try to set up port along the coast, but any deeper and they would be devoured by the native wildlife, let alone the horrid diseases and Arognians. Altmeri resources are spread thin if the war is to erupt again. The time it would take to get to Morrowind, the loss of manpower, and trying to maintain said manpower does not justify whatever gains the Altmer may have there. That and they'd have to resist the overwhelming desire to purge the heretics.