I think this has not been done is because there would be about 500 different races or something running around and nobody would know who belong to which race, they would all look alike a bit so this would just be confusing. I like the current races as they are now, however I hope to see some other races being playable in the future as well, like Maomer and Sload.
Hybrid characters are a cool idea. I'm fairly certain, that at least some of the races can interbreed. Not a bad idea for a mod or part of some future update/DLC. It is a bit complicated, however. There are a lot of possible combination for hybrids - that's a lot of racial abilities. Also both khajiits and argonians have a large variety within their species. Plus there are more intelligent races on Nirn, than the ten we usually play.
It would be very difficult to add that many new NPC options - Bethesda didn't cover the ten races that well. I think this could be done, however, especially as a Player option To prevent the character list from getting long, the character creation menu might need a subrace menu or you could select your parents race, and you get weakened versions of their racial abilities (what if your parents were hybrids? argg).
If I don't see anything like this in the mods, I may give it a go - I'll probably just add the sub-races to the list in the character creater rather than create a 'parent tab' or separate 'subrace menu'. It wouldn't be difficult to do, but rather time-consuming (especially if you stay true to the lore and game balance).