I've had this idea for a while now, so bear with me.
I've been hoping for something taking place in between the events of Daggerfall and Morrowind. I was thinking something rooted in politics, so I looked for civil wars and the like. I thought about the 5 Years War between Elsweyr and Valenwood where the Khajiit took some land from Valenwood in the end. A few years after the war (probably in 3E 400-something), there would be some residual tensions and the like which occasionally lead to violence. The whole plot would focus on stopping another war from happening, which you can achieve in multiple ways, peaceful or violent, and the choices you make will affect the game world as a whole.
I also thought that the Summerset Isles should get involved or something. Not because I like the Altmer, but because I hate them and I think they would be interesting to add. The pretentious lot of them sticking their noses in the issue as a "neutral party" when (plot twist) they secretly want a war to happen! At least, the high magister or whatever wants it to happen because he tried to contact Sheogorath and now he's lost his marbles. Or maybe his mind. No, probably just his marbles. Have you ever lost your marbles and tried to find all of them? Could make any man go insane.
Also, adding the Summerset Isles would call for some seafaring. I like seafaring.
I think it would be pretty good for memory and framerate, since the provinces are pretty small and there would be easy justification for requiring a load screen to travel between provinces. Also, some of Valenwood's cities are founded in giant trees that migrate during the winter. The cities move.