There are significant issues with the setting, as outlined in the original post.
When months ago reading the website when the backstory and timeline were mentioned several things led to immediate groans. Namely the use of "Dread Lords" and "Arnor" as terms. Having two mythic civilizations clash is fine, but please don't recycle terms from your other franchise, and be consistent with what you call them. Instead of the "Dread Lord XXXX" or the (even worse as it sounds like something from a 13 year old's D&D setting) "Dred'Nir XXXX" come up with something that doesn't sound like it is from a draft using placeholder names.
Going into the factions themselves- there's no clear feel or distinction between any of the groups.
It also doesn't help that the Fallen factions are particularly bland at best, or poor 'homages' (to be kind) of other franchises. Pale blue/green 'Wraiths' with facial tattoos that eerily look like the villains from a deep space franchise?
Unfortunately, due to the novel and campaign we'll not see the sort of drastic reboot that the lore could surely use.
Regardless, each faction should have some clear rethinking to provide clear art direction that give each a unique feel. Altar might be a standard fantasy kingdom, Pariden could go for 'high magic' with things like floating gardens and towers. Other factions might drive home the 'highlander/viking' look, yet others might do a slightly Renaissance Italy appearance (maybe with a little steampunk thrown in for their higher tech buildings to show their economic wealth and power).
The Fallen should similarly have unique looks for each faction based on their history and the idiosyncrasies of the Mage Lords that experimented on them.
When it comes to AI behaviors, one thing that could liven it up would be disposing of the good/evil dichotomy between Kingdoms and Empires that the lore focuses on.
Perhaps New Pariden are pacifists who focus primarily on magical research and tend to betray all other factions once having a strong enough economy and enough magic and mana. (like the Psilons in MOO)
Altar might be governed by a fanatic who strongly supports other Kingdoms, but believes in an ethic of racial purity, declaring war on Kingdoms who have dealings with any Empire or intermarry. Altar might be warmongers who have constantly driven the conflict between the Empires and Kingdoms since the Cataclysm despite efforts by states such as Capitar to end it.
Capitar might try to build strong relations with the Empires, have a strong conventional army and focus on trade routes.
Tensions between the kingdoms would be good in the lore as well. Perhaps Capitar's trade empire has resulted in colonialism against the Tarth and some of the weaker Empires? Tarth raiders might be typical, and they might balance their wars with Capitar by giving Altar unwavering support in genocidal crusades against the Fallen while convincing Altar that Capitar is 'unpure?'
With the Empires, Krax might be viewed as a traitor by Altar but perhaps initially tried to make strong inroads with the other Empires to bring them back into the fold? As a nation they incorporated a huge population of Fallen and became a defacto human empire minority attempting to govern the others with a hierarchy. The falling out between Altar and Krax might be a matter of being viewed as 'going native.' They might have old human architectural styles (Roman/Byzantine influence), and a very mixed and cosmopolitan population. The current Kraxian leader, taking over due to a power vacuum from the last Altar 'crusade' might be a somewhat shadowy figure (perhaps one of the Mage Lords who made the Fallen reborn) who may be tipping them into a crueler direction.
Magnar might be an Empire where ranking is done based on the amount of dragon blood. Footsoldiers being human, and governors and princes being full dragons and/or the most draconian lines of humans magically modified by the Mage Lord that founded their empire. This would encourage unique buildings (palaces being the lairs of the resident dragon lord), and units. They may be undergoing continuous magical experiments with dragons as there are fears that the bloodlines are running thin.
Resolin could perhaps be revamped into a nation-state of individuals that were engineered into being magically sensitive. The end result being strong ties with other planes of existence, summoning, and seeing. They may have strong notions of predestination and a strong theocracy governed based on the optimal paths seen in the future. A very slow moving and conservative group that keeps to themselves except for high level powerplays they know they will win. Their AI might emphasize inter-marriage with other groups and long term investments. Perhaps they're a matriarchy of seers and males generally serve roles as foot soldiers and traders?
Pretty much, questions need to be asked about how did the Mage Lords that founded the empires try to re-engineer humans with their experiments, and the unforeseen repercussions of how it would shape their societies? Likely there would be difficulties in maintaining the Empires as originally seen, the natural order starts creeping in and many of the Fallen are trying to take on their own experiments to stay alive. Similarly, the Lords that created them might not be viewed in the best light and there might be conflict over some who want to research a 'cure' or overthrow/exterminate the bloodlines of modified individuals. (extreme nations like Altar finding support among the lower classes)
Overall, a lot of thought needs to be put into the Empires and Kingdoms to add depth so it's no longer 'east v.s. west' 'good v.s. evil' or... more horrifically as some critiques of the book have suggested: 'brown people v.s. border wall.'
Of course, the best thing to happen to the franchise would be Big Bang #2- another cataclysm that wipes out most of the planet and collides it with another universe inhabited by Orcs, Lizardmen, Elves, Dwarves, Minotaurs, and 'traditional' fantasy races and killing 75% of the Kingdoms and Empires. (which let's face it, most want to mod in and are clamouring for) Something bland, but fun, and not just bland. ...and somehow this cataclysm erases the Dreadlords and Arnor. Hrmm... speaking of Dwarves and fun, quirky, creative lore perhaps Arnok the Blood God causes it?...) There's a reason that the modified Tolkein mythology works- people have those built in archetypes and doing things like "Our Orcs are actually a massive cosmopolitan empire that fights off the human barbarians!" could earn a lot of brownie points.
Ah, here we go Cataclysm #2: A world of civilized Orcs who learned everything from the fading and falling Dwarven kingdoms, besieged by cannibalistic elves who worship death magic. These Elves in order to wipe out the noble Orcs slammed their world into Elemental!
Also, everyone starts calling Gildar Gold and Hieroganomicons Encyclopedias after learning proper words from the Orcs.