1. Khajiit are the second most commonly enslaved race in Tamriel (particularly in Morrowind)
2. Khajiit's form is decided by the moons. Depending on their position in regards to each other and Nirn, a Khajiit can range from a common cat (Alfiq), though anthropomorphic "cat-men" (Suthay, Cathay, etc.), to tigers and lions (Senche).
Something commonly practiced among slave owners is eugenics. Basically, it means pairing a male and a female with desirable traits so that they create offspring with these traits, increasing their effectiveness. With Khajiit however, you cannot do that, as the Khajiit's form depends on the moons. You might have two human-sized Khajiit produce a Senche or an Alfiq as offspring. This makes Khajiit not very good slaves, so why would the Dunmer use them as such?
We know that a tiger is a lot bigger than a cat, so if only the moons determine the form a Khajiit takes, I see some serious problems with Alfiq and other small breeds potentially giving birth to Senche and any other larger breeds (and being ripped in the process). That means that either a) It's not just the moons that determine the form, or b) Khajiit have some kind of undefined form when in the womb, and they only turn into their respective breeds once out of the womb. Which is more plausible and/or supported by evidence?