Winterhold's past is quite fascinating. There's enough information to from an intelligent debate in the subject and not too much for the mystery novelty to die, like in my eyes, the Dwemer have.
We all know the city was destroyed x years ago and that the College was blamed. But would a city be more useful to a player than a mystery? At present no one has made an effort to rebuild Winterhold, but I think it should happen asap.
Wouldn't a city-sized Winterhold disproportion the game, though? It would shatter the balance of Skyrim's territories and give the Stormcloaks an advantage in the lore (not that I would have a problem with that). The game designers would also have to talk more about the Argonian-Dunmer conflict to justify the presence of Dunmer/Argonians in Northern and Eastern Skyrim, or make Red Mountain only affect Morrowind.
Skyrim's cities are in the furthest West and Furthest East of it's borders, with one in the centre. This is a nice balance, I find.
But in real life, builders didn't spend time finding a pattern to place cities in so they'd look pretty from the sky, they built them wherever there was a trade route and natural protection. I personally would have preferred Winterhold in the game as a city, but what do you think?
I'm eager for your thoughts.