What is The Eye doing?

[Mysterysword]

I'm pulling pretty much all of this out of my ass, but seeing as how the Azure Dragoon is a symbol of hope for the Ishgardians to rally around and keep fighting, and seeing as how Nidhogg actively wants the Dragonsong War to go on for eternity so he can torment the Ishgardians forever, I'd say this is his purpose in creating Azure Dragoons.

Sort of like giving your enemy guns, and thus giving them hope that they can defend themselves, when you have missiles.

As for why Nidhogg then chose the WoL, I can only assume that he wanted to try and manipulate us into bringing the Eye back to Ishgard. It's a little far-fetched, and honestly seems too subtle a strategy to fit with Nidhogg's character, but it's the best I can come up with.

I also considered the possibility that it's the dragon heritage that all Ishgardians* have, that the Eye is reacting to, but that wouldn't explain why it reacted to the WoL, who is explicitly stated to be a foreigner to Ishgard, and therefore most likely doesn't have Ratatoskr's essence in them.

*Speaking of Ratatoskr's essence being passed down through the generations, I've been wondering how every Ishgardian can possibly have it in them. If only Thordan and his knights ate the eyes, and then passed them down, and as far as I know, all of Thordan's knights were Elezen, why would the Hyur population of Ishgard also have the essence? I thought interbreeding wasn't a big thing in Ishgard, and if it was, wouldn't it have shown in the features of the people?