[brxbrx]

Wouldn't Fenrir be more appropriate for Niefelheim? He's kind of Dire Wolf-ie.
And my comparison to Abysia was just to point out how little a Muspelheim nation would add to the game. Fire Jotuns wouldn't be the pinnacle of creative thinking, and strategically they'd only be so little different.
I don't know very much about Norse mythology (I'm more of a Judeo-Christian man, myself), but a cool idea for this nation would be a fire centered people living in a cold environment. In Dominions, people adapt to their climates naturally. What if this nation did so magically, with fire and whatnot (though I suppose fire composes most of whatnot...). And honestly, enough nations have the Herse/Jarl/Huskarl/Hirdmen hierarchy. What would be cool is a more dwarf-centered Scandinavian region, with some kind of thane-ocracy instead.
Finally, this thread seems to be fertile soil for suggesting new nations, so I'll toss in another idea.
Pre-Islam Arabia.
In fact, Arabia seems very left out in this game. Helenists, Romans, Egyptians, and Persians all have their representative nations (or at least units). I think Arabs would make a great addition.
For instance, camel based cavalry would have more movement, less defence, and less morale, and maybe greater size. Like C'tis, combat would be with falchions and sabres, but armor would be much lighter. National summons would be djinns and efreeti, and magic would be fire, maybe water, and air (I don't see enough fire/air). They could also have national evocation spells that do something along the lines of a sandstorm, in fact, they could have a small sand-based theme. Ultimately such a nation would be very refreshing (in a 'where's that oasis' kind of way) for its new magic focus, reattribution to relevancy for that djinni lamp guy, and new tactics.
Just my 6 million Zimbabwe-bucks.