Possibility A: The tools worked. Kagrenac successfully used his tools, and possibly The Calling, to take his race and remove them from Mundus, the Mortal Plane. He either turned them into Deities or simply allowed them to move freely in the Outer Realms.
This is possible, but unlikely. If it had happened, then Vivec, who is a God himself, probably wouldn't have said that "I have no sense of them in the timeless divine world outside of mortal time". In addition, for reasons discussed below, I believe that certain Et'Ada would never have allowed the Dwemer to carry out this act of arrogance. Finally, one might think that if the Dwemer had become Gods, we would have heard more about it.
Possibility B: The tools failed. Kagrenac foolishly de-created his race and erased them from Nirn. They were either destroyed entirely or were transfered to somewhere outside of Nirn and died.
This is more likely. The book "
The Egg of Time" seems to indicate that there was a debate going on. The book argues that it is safe to tap the power of the Heart, and that the Dwemer who believed that it was a great risk were incorrect. I believe that this kind of "debate" wouldn't have been revealed to us unless tampering with the Heart actually was dangerous, and that something terrible very well may have happened if Kagrenac had tried to use the tools on it. Also, there exists an article entitled
Sermon Zero of the Thirty-and-Six-and-Nine Sermons, which was given to us by Jobasha on the official forums. It is highly confusing and likely not considered an official document, but it contains three secret messages which can be deciphered from the text. One of them reads "To the Dwemer and Oblivion belong this treasure and they are there dead".
Possibility C: Kagrenac had no chance to actually use the tools. The split second that he did, Daedra Prince Azura snatched him and all of the other Dwemer from Nirn, and imprisoned them in Oblivion. Alternatively, he did use the tools, but as soon as his race was removed from Mundus, Azura imprisoned them in Oblivion. Or he died before he had the chance, and Azura instructed Nerevar to use the tools to destroy the Dwemer enchantment upon the Heart, making them instantly disappear. Either way, Azura put them in Oblivion and there they may or may not have died.
