Movement speed, and jump height/length possibly, is affected, damage is not.
From the Bethsoft forums, Domilasa posted:
Here's my workings;
Hitting Imperial Captain with a Daedric Warhammer (first enemy you meet with a new character);
Base hp = 50
After one hit;
Breton = 44.21 (Scale 1, base 1.00)
Altmer = 44.21 (Scale 1, base 1.08)
Breton = 38.41 (Scale 2, base 2.00)
Altmet = 38.41 (Scale 2, base 2.16)
Changing scale via the console effects damage, sure, but everything in the game has a default console scale of 1 so damage wont be effected by race. Base scale doesn't effect damage which is what is different between races.
If their run speed tests are correct, then the taller races run slightly faster, which makes sense, but it doesn't effect damage.