Do you think they just did that due to game limitations? I mean part of having a kid is having half of your genes passed down. If the mother's override all of the father's genes, then I don't see why there's a point, since all of the women of the same race in Tamriel would all be virtually indistinguishable, since there's no mixing going on at all.
There's mixing, but it's more of the dad's genes are there very subtly, and there's seems to be a likely chance that the environment a race lives in causes it to change when it moves away the main group after a few centuries. But as I said earlier, the bretons are a hybrid race of centuries of isolated breeding between the aldmer and nedics, which eventually caused the two races to became the race known as the Bretons. Hell, when the nords first arrived to High Rock, they thought the bretons were some mer needing to be killed as High Rock was inhabited by men who looked like mer. But the whole mother's race bit is pretty much there so that Bethesda does not have to deal with orc-imperial hybrids and the sort, thus turning 10 races into 100, if you catch my drift.
But just to make sure everyone gets it, the bretons are the only half-elves in TES. For the sake of which race belongs where, it's bosmer, altmer, dunmer, and orsimer (orcs) are all mer (elves). Bretons, imperials (more accurately Colovians and Nibenese), redguard, and nords are humans. Khajiit are decended from mer, but were changed by Azura by linking them to the Lunar Lattice to stabilize their form when [censored] was crazy during the extremely early parts of Nirn's creation. As for the argonians, they're linked to the Hist, so they're completely separated from the men and mer division, and very likely to not be compatible, as men and mer were at one point the same race.
It's also mentioned the Symmachus was tall, and it was rumored that he was part Nord.
There's Dunmac Dwarf-Orc, but that's more of a "Yo mama is so fat" kind of deal. As for me, I'd say it's not really because he is part nord, but bigger than your average dunmer (he did work in the mines, so he probably looked stronger than the norm). However, it is not too far off to say he may have some nord blood in him, as the nords did used to live in Morrowind way back in the day and continue to launch raids in Morrowind.
For obligatory reasons, http://www.imperial-library.info/content/oblivion-racial-phylogeny-and-biology. If you read it carefully, it leaves room for some interpretation, just not 50:50s, more like an implied ~95:~5 Mother:Father genes. Magical manipulation is likely to happen also, but that's feels it's something to require a lot of power. This, of course, doesn't matter with mods as those who have access to them (PCs) can fill a mold they wish, though those on the consoles could manipulate a race's looks and color enough to roleplay a hybrid without Bethesda having to bend too out of shape. Hell, I made a dunmer with green skin like an orc when I was fooling around once with the race creator.