December 16, 2013 6:53 AM EST
30 years isn't enough time to recover, it's not only about having babies but also train them, create the economic structures required for professional standing armies and the creation of seasoned veterans. Certain factions of Valenwood were against the Dominion others were with the Dominion, to say Valenwood was made to adhere to the Thalmor when seeing that the Thalmor are also composed of powerful elements of Bosmeri politics and lobby's. The Khajit adhered to the Dominion willingly. Valenwood does produce food, in the form of meat, not all of Elsywer is a desert and from what i've heard the Summerset Isles are quite abundant.
The human nations didn't acquire peace after the end of the Great War, Skyrim is full with internecine conflicts as is Hammerfell, now that the Empire has relinquished its hold factions will rise and fall in their bid for power.
The dunmer are going to avoid a direct confrontation with other nations but that doesn't mean they are going to be helpless, they have ports, mines and other logistical and natural resources that could aid any side they would choose to help. Even if they stay out of it and remain independent, where they to shun both Dominion and Empire the one to be most affected by it would be the Empire.
The Dominion is indeed very capable from a diplomatic standpoint, gaining the alliance of the Khaijit and certain power groups in Valenwood, not only that they tried to force the Empire to go to the negotiating table after taking the white-gold tower, or the pact they made with the Redguards. This shows that the Dominion uses war as a means and not as an end in itself, basing their legitimacy on basis of the law. Something the Empire founded by Tiber Septim also did but are failing at the diplomatic and political game lately. Just with one pact, Skyrim is at war with itself and Hammerfell got separated.
The Dominion is playing it smart, they have committed some errors but they learn from them and fast. Seeing how the Thalmor plan in advance with such level of detail and knowledge, they have already planned for the next steps in the game.
Not saying the Empire doesn't have its strengths and resources but wars are won wilth the mind not with brawn (a focus pro-imperials have in general). Just a bit of advice to the Empire, the Dominion underestimated you to a certain point, don't return the favour if you want to win.