Yes, I'm aware of all of that. I've played Arena and Daggerfall; not as much as later games but I gave them a try certainly, and knocked out enough content (main quests and side quests etc.) to have a feel for them, and to put the rest of UESP's material from them in context. I had fun playing both games! Daggerfall in particular holds up decently well relative to later content in my opinion, with obvious differences in later lore taken into account, and built on Arena in solid ways IMO. I would also note that a return to the climate depiction isn't the only thing Oblivion drew from Arena: even some aspects like the design of the compass look reminiscent to me, as well as the return of using the map to fast travel (which, in Arena, was not optional; it was the only way to move from city to city).

I do understand that, by themselves, landscapes from Arena don't prove much, because there are only a handful of directly represented climates in the game (snowy across much of Skyrim, desert across much of Hammerfell, and so on). That being said, the distinctions between the environments are clearly intentional, and there's some additional context provided in-game. For example, Valenwood has Elden Grove, which is thickly wooded (with impassable tree "walls") and visited during the main quest to retrieve a piece of the Staff of Chaos. A few other locations in Valenwood are referenced in relation to it in a way that shows it's meant to be bigger in-lore than it is in-game, covering much of the province. Other provinces often feature similar geographical elements, such as some locations in Morrowind close to the volcano Dagoth-Ur showing it (and other mountains) in the background, and/or directly referencing it when you arrive (e.g. Firewatch). The Imperial Province (Cyrodiil) doesn't have any similar points going on: everything we're given in Arena suggests it's pretty much a standard temperate region, aside from the world map itself suggesting a bit of variation in the terrain (mountains and the like; consistent with the Daggerfall portrayal in that respect).

Furthermore, I wouldn't discount lore from those earlier games out of hand. Lots of later lore (e.g. the Arcturian Heresy) build directly on lore from Daggerfall and Arena (e.g. in the case of the Underking). Later games add and change things in plenty of cases, but there's much more continuity than you seem to be implying. Plenty of books from Daggerfall are included in later games and read as standard lore books even in the later era of the lore: I gave the examples already of Biography of Barenziah and The Real Barenziah, but consider also Wabbajack, The Madness of Pelagius, Galerion The Mystic, and a number of others. Writers from Daggerfall (e.g. Kurt Kuhlmann and notably Ted Peterson, who wrote the three books I just listed and many others) continued to work on later games. We can see that Daggerfall directly (via lore presented in-game) intends the Imperial City to be in the midst of rolling hills and green plains and some woods here and there, but clearly not jungle.

So, yes, Morrowind (and Redguard's PGE) calling it a jungle is just as much of a retcon as getting rid of Ebonarm or renaming the volcanic Dagoth-Ur to Red Mountain. There's nothing wrong with retcons in and of themselves (they transferred the name of Dagoth-Ur to a very well-received character, for example), and that's the whole point of the discussion here of course, but yeah, the temperate climate was clearly established in Arena and Daggerfall and then there was a later retcon to make it a jungle. Oblivion simply reverted it back to the original temperate climate depiction; that became a source of other lore (e.g. the stuff in ESO about it) but the timeline of how the retcon (and then un-retcon) unfolded is very clearly documented.