Secondly, I think that a proper timeline would be invaluable to any discussion of Arcanum's history.
True, I'm kinda surprised no-one has ever attempted it, but then again no-one has actually even tried to collect Arcanum's lore anywhere. Sad, but true. Compare that to many other games with even less lore having their own wikis neatly documenting every small bit. It would be awesome if remains of Troika (in Obisidian) would release the design documents. I'm sure they still have them.
I'm not entirely sure where you find support for your nuclear war theory. While it is plausible I find it unlikely due to the lack of fallout and the rather healthy environment we find in the game. A nuclear war the obliterated entire cultures would, I believe, leave scars on the land. The manual does indeed sugest that the orcs were involved somehow. A simple war between orcs and dwarves works as an explanation to the Iron Clan's downfall, without the nuclear aspects. However, the game does mention some sorts of "weapons of mass destruction" (either Ravdner or Loghein (or however they spell their names) talks on the subject briefly) in the form of machinery able to destry mountains and the like.
You know Fallout takes place and even the second part advances time merely by 160 years since the war, so it's nothing compared to how ancient Iron Clan was. Also in that setting effects of nuclear war are grossly exaggerated, since it tries mimic 50s nuclear scare theories which promoted idea of nuclear weapons turning everything to arid desert. This is also why there was no nuclear winter either, but it's highly probably that nuclear winter is just as bogus theory as nuclear desert. Radiation and fallout as we know will be likely gone in few hundred years at most.
Considering that Age of Legends ended most likely about 2000 years ago (at most) and lasted for maybe 1000 years or so, it means that there still would be atleast millenium or so between it and the destruction of Iron Clan (if we say it happened few years/decades after the creation of orcs), though I'm not sure when Elven Council was established (someone who knows could correct me), but it was definitely not so long ago as the creation of orcs. Pretty much most of the effects of a nuclear war would be probably gone by 1000 years or so, leaving only the hints of destruction which do exist (somewhat), considering how there is no ruins or anything left of the Iron Clan times.
There could be massive craters still left though (unless the weapons were airbursts), but even they could eventually turn into swamps and bogs or otherwise get filled with vegetation. Also if a city was built on top of such crater(s) I believe it/they would be likely filled. Even 1000 years is a really long time. There's also lack of forests in Arcanum. We all know forests of Morbihan were cut down by Tarant, but Caladon cutting down all Arland forests seems unlikely at most and there isn't really much forest outside Thanatos and Glimmering anyway. Something big happened and it wasn't probably just Tarantians and their clear-cutters. I find it hard to believe that it's just game logic either, since they managed to easily do forest areas in some places.
The reason why I had this hypothesis of M.A.D. by nuclear and/or magickal war was partly because it was made by same guys as Fallout, but also because something very destructive made dwarves to retreat into caverns (this is a concrete fact, actually), possibly caused surface dwelling dwarves to mutate (tomb in Tarant) and the fact that not even elves (or anyone) seem to have any records (not even oral ones) dating back to those times. Note how even the Iron Clan itself is just a myth. It could be magickal superweapons only too, but it was something EXTREMELY huge and destructive for sure. I can't see mere dumb orcs destroying most technologically advanced culture, even if they'd come in hordes. I mean wouldn't they just shoot them and laugh? Now on the otherhand their mage masters could easily do that (like Arronax), but there is possibility that dwarven weapons of mass destruction were involved too.
Regardless, those facts above suggest that there was some sort of massive destruction and it had long lasting negative effects to the living conditions outside dwarven caverns. Elves might have avoided that partly through magick and humans/others probably just survived through the hardships by just enduring them.
Those machines of mass destruction mentioned by Randver and Loghaire refer to different and more recent time though. Specifically the Clan Wars of Lorek. I believe they are probably more of a humongous mecha type, but it could refer to nuclear bombs too. That was 500 years ago IIRC, but even that time is pretty much enough to hide most effects of (very small scale) nuclear warfare especially considering that they didn't probably use many of such bombs during Clan Wars. I believe the levelling of mountains could easily and most likely refer to single event. Still, it might that Lorek possessed some of the Iron Clan technology. Infact it's more than likely since it seems that Lorek's clan (or kingdom or whatever) was based in Arland considering that the final battle was fought in Gorgoth Pass. It might have been that Lorek was trying to revive some sort of Iron Empire (I will delve into this later), ie. multiracial empire ruled by dwarves (who would consider themselves racially superior), since it's hinted he betrayed his stone and thus his race.
There is also the fact that something very long lasting is powering all the gadgetry of both Iron Clan and Vendigroth. It's definitely not coal burning or even somesort of gasoline combustion. That pretty much points into nuclear direction, unless Fire Gems (mentioned by Teach) are the suspect. I mean if they are actually naturally (and thus neutral) occuring phenomenon in Arcanum and produce long lasting heat, then they could be easily used to generate power. Then again it doesn't make much sense why we never see anything powered by them even if they are rare. There is still possibility though that the Fire Gems themselves are somesort Arcanum equivalent to fissile materials and their heat generation is actually caused by nuclear fission reaction, so it might be that the current technologists of Arcanum don't know how to use them.
Having a powerful magickal enemy cotemporary with the Iron Clan capable of destroying the all the ancient cultures (ancient meaning Iron Clan era) would work if this "enemy" in fact is an early version of the Elven Council (then consisting solely of followers of the "conservative" dark elven philosophy) and actually survives and thrives after the cataclysm mentioned. (That would further challenge your nuclear war theory, I think.) The problem here is that the Iron Clan must be, as you point out, much older than the Age of Legends. The Iron Chest itself is the sole remaing Iron Clan relic in Bellerogrim's lair. It's much older than the dragon and the dragon itself was pretty old at the time it was killed by Kraka-tur, which was during the Age of Legends. Yet, if the Elven Council caused the cataclysm and built a new society afterwards, then the Age of Legends would follow immediately after the Iron Clan's demise and not much later. This could easily be retconned, however.
There is also rather interesting possibility regarding origins of Iron Clan that wouldn't be so problematic with Age of Legends stuff. It might have been that the Iron Clan itself was splinter group of greater dwarven empire that used to exist way back. It could be mean that catacalysm that destroyed surface dwelling dwarves happened much more earlier and orcs or the party who made them had nothing to do with it. The fact that Iron Clan was a clan and not Iron Empire or something suggests this, but it could still have been once something like Iron Empire and only reason why we know them as clan was the fact they were just small band of survivors of some very devastating event. Maybe Iron Clan was small group like Fallout Brotherhood of Steel that eventually got overrun by orcs and magick. Although it's highly probably they once were great empire at some point, since it's unlikely some small dwarven community developed technology that seems to be more advanced than Vendigroth.
Another theory (more like wild hypothesis though) that gets often thrown around is that the Iron Clan were surviving Vendigrothian dwarves, but this is discounted by the fact that their time capsules (which were obviously designed by civilization that already knew it was dying soon, can't see why they would make such places if they were prospering in some golden age) are more older than Vendigroth.
This is a very interesting theory. Early dark elves (or elves following the same elitist philosophy) could fit with my Elven Council theory. The early (dark) Elven Council fights the Iron Clan and creates the orcs to do their fighting for them. Afterwards the council slowly drift towards the more peace loving Nasrudin style Council causing their more conservative members (the current dark elves) to form their own club. The relation between dark elves and orcs that you sugest also partially explains the fact that the dark elf racial icon is a combination of the orc icon and the elf icon as I mentioned in this thread
. The others did not agree with my theories, however.
I like your theory, though to be honest I was personally thinking a way different scenario that had nothing to do with Elven Council. In my scenario an alliance composed of all races was fighting against lost dark elven civilization led by great necromancer who made orcs (from humans, most likely) as slave warriors and laborers. Something akin bit to Mordor and Sauron. Anyway it was good observation concerning the racial icon and I'm pretty sure it was dark elves who made the orcs. I mean, anyone else would be very unlikely canditate. Unless the orcs were actually formed by accident in the catacalysm (whether nuclear or magickal) that made dwarves to retreat into caves.
I can't see any relations between the Iron Clan and the Vendigrothians; they are on completely opposite sides of the continent. However, we do know that the Vendigrothian Empire was pretty large. The cogs found in Shrounded Hills are probably of Vendigrothian origin (the only readable text on them is "...groth", after all), which sugests that they were pretty far reaching.
Noting how there is no Iron Clan related ruins anywhere (aside two places which clearly weren't ever meant to house people) I think someone must have looted them so hard that there was nothing left. One explanation would be that they were very small akin to Stone Cutter clan (like I pointed earlier with enclave-hypothesis), but considering how high level of technology they had and how lasting their legacy seems to be, I find it hard to believe they weren't something greater at some point. I'd say they might have occupied whole Arland at some point and they might have worked alongside humans, gnomes or even (non-technology despising, they seem to exist in game ironically enough) elves, but that might have been before they were a clan.
The way I see it there might have been many ruins of Iron Clan (or their forefathers) in Arland, but early Vendigrothians (which at that point weren't so advanced) amassed naval exploration fleets that would loot and ravage those ruins while shipping their spoils back to Vendigrothian factories for reserve-engineering and repurposing. These places were probably considered as taboo by other cultures, but Vendigrothians didn't care. It's highly probable that Elven Council didn't care either. Infact they might have been even happy that someone was removing "bad" technology from their lands. Even dwarves probably didn't care since it's unlikely they understood it was actually dwarven ruins as they already had this cave-dwelling mindset. It could be even that Vendigroth claimed that those ruins were made by their ancestors and others bought that theory. The latter might explain why no-one seems to remember those ruins.
Anyway, I don't agree with Vendigrothian Empire (in a strict sense) though. It is clearly stated in the game that they were a city-state, but they definitely were very large for a city-state. Much larger than anything Arcanum currently has atleast. They might explored whole Arcanum and beyond, but I don't think they had permanent settlements outside the current wastes and Isle of Despair. Reason why that cog ended up in that mine might be that someone looted it from Vendigrothian ruins (way back) and it was just used to make equipment that was used to mine the iron. Surely there have been looters all over the place anyway (probably explains lack of surface ruins) and I don't believe that mine is so old that it was originally Vendigrothian. The reason why not many know of Vendigroth might be that majority of surface looting happened so long ago that people didn't even understand what they were looting and things got repurposed or smelted. It's hinted though that most ruins are underground, so it's doubtful there was much to loot on surface, but since there are still few surface ruins left, it would suggest there used to be more. It might be also that dark elves who despise technology were deliberately supressing (atleast at some point) the existence of Vendigroth and destroying what remains they could.
Also, having one race being absolutely dominating all technology (as the Iron Clan dwarves would do during the ancient era) could make a game a bit strange for non-dwarven technology using players.
True, though there could be always fellows like Bates and if the Iron Clan (or their ancestors) were large empire or kingdom they surely had people of all races, even if it was the dwarves who had most of the political power. Like I said before it is totally unknown how big was Iron Clan and what was their origins. Only thing we know is that once there were surface dwelling dwarves in Arland (atleast VERY VERY long ago, in literally caveman times, eons ago to be correct, what followed those times is unknown), so Iron Clan might have been either very short lived remnants of something greater or very long lived remnants of something greater. Anyway, if they were remnants of something recently destroyed this could mean Fallout-like scenario with people surviving in the ruins of once great civilizations and Brotherho...I mean the Iron Clan hoarding most of higher technology and Big Bad Enclave of Dark Elves planning magickal purge of sub-elves.
This scenario might conflict a bit with Age of Legends though as you pointed out earlier, unless that age was short-lived (few hundreds years at most) and ended up with Iron Clan (and most of dark elven remnants) being destroyed while civilization and environment recovered.
On a final note, I'd like to mention that your prequel lacks one ingredient which was vital for my enjoyment of Arcanum. That ingredient is that it mirrors our world, albeit very loosly. To begin with we have the 19th century industrial revolution led by Tarant and the Unified Kingdom and the gnomish bourgeoisie fighting it out with the orcish proletariat. The dragons are the dinosaurs of Arcanum. Even though the timeline doesn't fit you have got to agree that they have the same role. Having a prequel where the dinosaur-dragons are alive and kicking, as you say, would feel very strange to me at least. There are, of course, MANY other similarities (such as the different races mirroring stereotypes of different ethnical groups in our world - I daren't enter THAT discussion just yet...) but these are enough for you to get the picture.
This is true, although with Age of Legends you could make parallers to real world Roman and Ancient Greek times. Interestingly enough, the game already does that. You could also see Age of Legends elves as Ancient China (maybe Elven Council was somesort of High Elves? Not much is known about them anyway), something that is suggested in the game already too with elven dynasties and all, but the fact that they ruled over other races would ofcourse change things a bit. Regardless, I seriously doubt the Elven Council was some tree dwelling forest elves considering their power. More than likely they had actual cities, probably bit like Tulla, but bigger, much more multicultural and less university-oriented. Kree for example could have been actually High Elven city, but I admit the architecture of it is kinda dark for that. Also IIRC dragons were really rare already by Age of Legends too, so I doubt there were many aside ol' Bellerogrim.
On the otherhand with Iron Clan times there would be not much room for real world references, but possibly maybe Egyptian influences (heavily edited ofcourse) would make some great basis for dead Iron Empire (if there was such thing) even if the Iron Clan doesn't express anything like that. Iron (which in this case would be exaggerated as technology that many would probably consider as a form of magick) vs. bronze dichotomy might make interesting plot-point though.
I don't see how can you balace tech and magick in a sequel (or prequel) though, unless you set it very near to the current time of Arcanum. I mean if you go way backwards then magick is stronger and if you go too much forward then magick weakens. 1920-30s themed sequel might be good idea though, but the reason I'd love a prequel would be that we could explore the history of Arcanum. Then again such exploring could be easily covered in a sequel too, especially if the Vendigroth was raised, since Vendigrothian historians surely would have very extensive records and solving mysteries of Iron Clan would make great quest. Infact it might be like the Half-Ogre quest. You would be resolving conspiracy of Vendigrothians that would eventually reveal lost Iron Empire (player could discover untouched ruins for example, which would be immediately afterwards destroyed by Vendigroth) as source of their wonders, yet no-one would believe you and the evidence would be gone. Infact it would be interesting if Vendigrothians were racist against dwarves generally (ironically enough), believing that technology is THEIR birthright and the dwarves are only new players on the block even if the truth is total opposite.
For even more crazier and outlandish hypothesis we might ponder on this:
What if Vendigroth was actually founded by few surviving Iron Clan dwarves even if it was mostly human city during Age of Legends? It just might be, considering that we know nothing of Vendigrothian history. Regardless, they definitely seemed to have advanced quite fast even though their tech level is "low" enough to have been reached in few hundred years.