Elder Scrolls have an in-universe explanation for their titty lizards:
The Hist Trees created the Argonians by calling forth the animals of the swamp, combining their genomes, and mutating them into the Argonian race.
This is also why they have gills, lungs, horns, vocal cords, thumbs, and various reptillian features with no consensus. It is not clarified whether or not Argonians are capable of reproduction without the Hist, but the vast majority of Argonians are born from eggs ritualistically mutated by the Hist.
Also, it's just a lot easier from a game design perspective if they use the same models as other characters.