Yeah, the fact that they don't try to change the culture is a good thing. If Elves try it the Humans would fly into rebellion. The Human Empires were the only ones to hold lands of other races without civil disorder for a longer period of time. The Elves never did this, only the Khajiit put up with them, but most of the Khajiit don't really care that much about the Dominion itself.
The Dominion ceases to be stable once it has a lot of Humans in its lands. I wouldn't want Elves in charge either, they suck at responding quickly to changes.
A good government would obviously be a mix, with a Human as Emperor (probably with at least a few Elven advisors), not saying this just because I prefer Humans, but in a Tamrielic Empire, Humans would make up the vast majority of the population, and Humans are still really intelligent and capable of adapting to changes really quickly.
Also, "onto the Empire they conquered", the Dominion never really conquered anything. They weakened the Empire, but that's it, they didn't even get the land in Hammerfell.
The only ones shown to be able to control large amounts of lands with differing races (and without civil strife) are the Imperials. It never worked out for the Elves. You also can't really blame the Alessian Empire for their extreme anti-mer views, they were enslaved by them for ages and only just gained their freedom. Understandable they wanted revenge, especially since they were in a position to get it.
The Empire included Elven gods for the Elves, Human gods for the Humans (Talos mainly because of the Nords, the Imperials didn't see him as a god and didn't force the Elves to worship as such. Even so, playing Oblivion or even Morrowind and Daggerfall, Altmer there don't seem bothered by it). You can change the culture, but it wil take a looong time. Ofcourse many races' culture changed under the Empire, but it wasn't forced on them except for the Empire-wide Panteon everyone had to accept except Morrowind. Civilians of both side suffered, Humans were enslaved and killed, Elves were killed.
The Manmer lived as lower-class citizens, and there was conflict from time to time. It's this kind of society that Humans for obvious reasons don't want, and it's the kind of society the Altmer are trying to make happen.
How do you know they never fought them? There were at least some Bretons fighting for the Alessian Order. There were at least some Bretons fighting for the Direnni. They were barely a race then, they were split up for obvious reasons. Besides, this is only a minor point. Conflict or not, they were lower class citizens looked down upon and discriminated against by Elves. That's what the Altmer would love to do against all of Men.
"Around the same time, the Alessian Order would make campaigns against the Direnni, weakening them enough for the locals to rebel against them" Bretons fought both sides, it's illogical to think otherwise. They weren't a united race.
I read all the articles. They don't consider Humans their equals and sure as hell not fit to govern, over time they will do their best to make Humans only lower class citizens. If they manage to win in the first place (which I don't see happening).
The main source is common sense and logic, the Thalmor dispise Humans, they may not want to kill them all, but they don't want them in any meaningful positions either. Not saying they'll remove all Human generals and officials, but they will slowly try and limit the number of Humans up high more and more. At the very least.
This is operating under the assumption that Talos is a lone, or conglomerate of Shezzarines, something that can not be proven, as it's just a theory (a whacked in the brain theory).
In the Roman Empire, of which the Imperials draw influence, they would worship the Emperors as gods, and when a new Emperor took the throne, the old cult was abandoned. That's how Cult of Talos got started.
What the Cult of Talos is doing is mimicking the beginnings of the Aldmeri Pantheon, which evolved from basic ancestor worship, to worshiping the ancestors of the nobility.
"The religion of the people also changed because of this change in society: no longer did the Aldmer worship their own ancestors, but the ancestors of their "betters." Auriel, Trinimac, Syrabane, andPhynaster are among the many ancestor spirits who became Gods. A group of elders rebelled against this trend, calling themselves the Psijics, the keepers of the Old Ways of Aldmeris."-Link's Awakining