I would ask if you had the Amulet of Kings, but then you wouldn't have been able to create the empire in the first place. I certainly wasn't Dragonborn in my game, although a few of my dynasty members were Dragonblood. I am also using a Ruler Designer character, so that's not the issue.
Found the trigger from the mod folder:
trigger = {
has_landed_title = e_tamriel
religion = eight_divines
age = 18
has_character_flag = tamriel_founder
OR = {
trait = nord
trait = imperial
trait = breton
trait = reachmen
trait = islander
trait = redguard
trait = dragonborn
trait = dragonborn_descendant
EDIT: So my Emperor ascended at age 93 (I was a vampire but too old so I cheated and added the depressed trait and committed suicide). The Emperor's heir had died at least 20 years earlier, so his son, the Emperor's grandson, inherited. The grandson, grandson's kids, grandson's siblings, did not get the Divine Bloodline trait.
Also why does the coat of arms change? It's really annoying.