The problem here isn't the hate, even during the end of the third era as the 4th was coming to a start, during the Oblivion Crisis. The Nords during this were far more friendly, at least in Cyridell (Can't remember how to spell it) In fact, I'm actually remembering some racial comments that the Nords were receiving special attention in Bruma.
And for what we know, there is no telling how long the Grey Quarter has had its name. Not to mention, the whole damn city is nearly a ruin as it is, so any section looks as if it could be the "Grey Quater". But no matter, the problem here though is the lack of attention. From Ulfric, from the Imperials, and narrow minded Elves. Each race struggling to prove there superourity, the Dark Elves did it first, by rebeling againts the there gods and left Summerset Isles, with infighting and lust for power, the ended up being cursed by Azura. But don't forget that the Dunmer have always had there own "pedalstool" attitude. The cat-folk of Elsewere didn't take here plops either and invaded Morrowind and warred with them, and there has always been the one single reason why men have always hated the elves to begin with. Or did you all forget that the High Elves, had once been the slave masters over men? Using them for sick and twisted enjoyment and manuel labor, spending all of the merithic era inflicting such unimaginable turture to men, woman, and children. For this was a sport, a hobby, a way of life. The problem isn't race,nits the lack of attention.