Firstly, even ingame sources do not outrightly deny possiblity of men/mer having offspring with beast races
Secondly, world of TES is rather refined and developed on deep levels and ingame literature is what it would be in our world - in-character expression of their subjective opinion based on their personal experiences, popular opinion in their society, their goals etc.
This means, that ingame sources are not the truth in its latest instance and should not be trusted.
Monomyth and arcturian heresy are both for example propaganda works of characters, who push their political agendas. Also character, who wrote book "Ancestors and Dunmer", which states that dunmer are seeing men as animals, may had been motivated to do so by other factors, than this being true.
Overal, TES world contains a lot of things: polititians, racists, fanatics, perverts (remember necrophiliac dunmer from TES4 or the person, who had lust for ghostly women in TES5)... it would be logical to assume even, that majority of Tamriel's population are uneducated village louts, who have no idea where did men come from, where did mer come from or who killed Lorkhan and why.