OMG it’s true! There is a breed of Khajit in The Elder Scrolls called Alfiqs that have an extremely similar appearance to normal house cats. Alfiq are as intelligent as any other Khajiit, and are extremely well-versed in magical arts. They are often used as spies given their house cat-like appearance. And just look how cute they are:

Here’s a better look at the chart of Khajit breeds and what they look like in-game (click for full view):

(via: The Elder Scrolls Online Forum)