I have played through the main story about 4 times on different characters, and everytime, I actually sit and read, watch and listen to everything said. I also ask all possible questions as well, just to make sure there isn't something I overlooked last time I did it.

The last time I finished it, and after completing wrothgar and listening to the final words from Varen, something struck me -

Right from the very start, there are casual hints and clues that Cadwell is close to Meridia. Like VERY close. After the coldharbour story, its pretty much admitted that he has been working for her all along, and everything that happened to you was planned all along.

At the end of the Wrothgar storyline, Varen warns of a big Daedric war coming, and the various princes are choosing sides. It seems inevitable they will need Heroes.

When you think about it, it seems strange that Meridia has had the Hollow City planted there for all that time without Molag Bal knowing of it - especially since it is surrounded by Daedra and theres a gatehouse with his 'daughter' in it! Add to which, Cadwell knows her.

I suspect that with the big war coming Molag Bal has had to side with Meridia, and a truce of sorts was called. The whole thing with the anchors was not much more than a ruse, a PR exercise if you will to lure mortals to Molag Bals side and to put out feelers to find potential heroes.

The problems with Mannimarco and the Worm Cult were an unexpected thorn in his side, but he decided to make best use of them until such time that they were in any danger of actually doing any damage.

So, Molag Bal tasked Meridia with asking Cadwell to find the much prophesied hero in his prison, and help them "escape". Molag Bal would put up some trivial defence as a matter of making them think they were actually escaping.

Likewise Varens escape was vital, as Molag Bal knew that Varen was the man for slowing down Mannimarco to give him time to get the main plan underway.

All along Cadwell is keeping track of our hero, and uses the fight to get the Amulet of Kings back as a way of testing their abilities. All the main story quests are merely a test, nothing more.

At the end of a couple of the quests, it is even hinted that letting Lyris and co escape so easily was part of a grander scheme.

At the end of the primary test, Molag Bal then stops Mannimarco from actually using the amulet, and lets Varen have it, knowing that it will be used in the final test against him himself. The grand prize for our hero is the return of their soul, but this is all part of the grand scheme.

Ultimately, when the war comes, our hero will discover that they have been used and manipulated in order to aid Meridia, Molag Bal and others as yet unknown in the war to come.

Why Molag Bal has chosen the 'good'(??) side is as yet unknown, but even he himself hints that there are far worse than him - Mehrunes Dagon I suspect will be at the core of the upcoming war.