Elder scroll series traditionally have 10 races and really there isn't any other races fit the story of vestige other than these 10 main tamrelic races, so adding more actual races is not really a good idea.
Buttttt those rare/extinct races are too cool to be ignored..
There should be options that "transmog" our appreances to races that are considered rare/extinct (without changing the actual racial passive), for example:
Mer: Falmer, Maormer, Dwemer, Chimer, Sinister mer, Ayleids
Men: Kothingi, Akaviri (Tho atmoran and nedes are also important past men race, they look way too similar to nords/imperials to have reason to transmog)
Beastfolk: Imga, Minotaur, Lilmothiit, Sload?
Also of course other akaviri races: Ka Po' Tun, Kamal, Tang Mo, and Tsaesci
Annnnnd all sorts of humanoid daedra
Make them quests in chapters/ dlcs to seek out those rare races' last members and/or their blood and/or their record of how do they look like etc, and transmog to their appearances