I was thinking of a possible DLC for Skyrim, The Return to Morrowind.
Bear me out, I wager that when the Red Mountain went up it went up like Krakatoa, thus all the areas around the mountain would be vaporised, however places further out on the Azure coast and Solestheim would be primarily buried under ash with some blast damage. There would probably be a new volcano formed in the ruins of Red Mountain, just as Anak Krakatoa lies where Krakatoa exploded.
The quest line could start as an archeological dig in the ruins of...I dunno...Balmora, and go on from there, featuring the in-fighting of House Haalu and Telvanni and so forth, and perhaps feature something dark lurking in the ruins of the Red Mountain.
Just an idea thrown out there, I would enjoy playing through such a storyline anyway.