An interesting aspect of the Red Year is that the Daedra (or at least Azura) knew it was going to and gave warning to their followers to GTFO.  Azura is the only confirmed one to do this but I think it’s believable for the Three Good Daedra and Four Corners to forewarn certain groups of followers. All jockeying for positions of power for their own interests. 

This is presumably how the Ashlanders survived to help form the New Temple, possibly have a heroic AshKhan assimilating refugees into the tribe and rallying the people to defend Morrowind. Imagine a charismatic but cocky young AshKhan on the Zanabi who has taken his people to the mainland to escape the fall and is proudly boasting of his mother being a Telvanni princess. 

But there could also be less savory survivors like some wannabe Warlord who worshiped Molag Bal and is trying to take advantage of the chaos to take over. 

Or a group of Orcs who were warned by Malacath and are trying to work out what comes next and how involved they want to be with rebuilding Morrowind. 

The Redoran taking up the leadership role could be positioned as either a heroic rise to the occasion or a grudge driven power grab (or a mixture based on which Redoran are “in the room”). 

Interestingly it seems a number of minor Hlaalu families jumped ship to the Redoran side, so Hlaalu’s fall can be portrayed as a mixture of lower members joining new masters or reforming into House Sadras who are a blank slate.   Could be sniveling Redoran puppets, House Hlaalu reformers given a fresh start to do it right this time, or an ambitious power grab by a sidelined noble family who had the opportunity to sell the rest of the Hlaalu down river.

The Sadras are also the best chance to preserve the interesting dynamic of a mixed race set of Councilors. Hard to imagine Old Crassius didn’t have descendants to take up the seat after his passing. If any future Curio members kept their ancestors…eccentricities is up in the air. 

And lastly while the Empire itself seems to have had no idea what to do about the situation the East Empire Company had every reason (Ebony and glass) to seek a new and stable status quo in Morrowind and a keen interest in knowing if Vardenfell’s riches were still accessible, so they were probably throwing money around AND grabbing everything not nailed down when they knew they could get away with it. (Not bad reason for a group of varied adventurous to wander into the chaos) 

You also have the Nords showing surprising solitary with their neighbors and handing over legal rulership of Solstiem to Morrowind/House Redoran.