All the Mer and Human races can breed with each other (though they may not be so successful) and Beast races can only produce children with their own race (aka argonians can't make children with nonargonians) and I don't know how the Elven marriage stuff works, I guess theres a bunch of hardcoded stuff that is causing problems (not being able to marry people outside of your court if you're old, not sure if that's hardcoded though)
All marriage/diplomacy things are basically hardcoded. You can to an extent "hijack" diplomatic actions but in many cases it's a very hacky messy system (which is why I haven't done something like AGOT's diplomacy yet, I'm holding out hope one day we'll get an "on_send_gift" action).
The Mer not being able to marry outside their courts is something I consider a serious issue and is a game breaking (in my view) problem with the way we're currently handling Mer fertility. It's something I'm going to replace in 0.1.5.