Ok, this makes sense; I don't know why I didn't see it before now. Fey are tall, dark and thin and possess magick naturally. Islanders are short, pale and stocky, and possess no magick. However, look at Scavenger, the Fey red cap. He's dark complected and has the angular, sharp features of a Fey, but he's short, like and Islander - even shorter actually, more like a dwarf class in a traditional fantasy novel. By all accounts he is essentially a shortened, stocky, squashed version of a Fey; or a dark, angular featured version of an Islander. Also, Islanders are naturally magickless people, and Scavenger never 'came into his magick', which makes him similar to Islanders in more ways than just his physical appearance. He is a red cap, the lowliest of the Fey, barely even recognized as a feeling, thinking being. Along with others of his kind, he has been relegated to the lowest class of Fey society, forced into doing the dirtiest, nastiest, most undesirable jobs that none of the other Fey will deign to perform. Since he'll never be able to perform any magick at all, he does the next best thing - he learns as much about it as he can.
Lets have a look at Matthius now. Matthius is is tall and thin for an Islander, and like Scavenger, he also is an outcast among his own people. However, unlike Scavenger, Matthius was able to progress in his society through the multi-leveled ranks Roccanism, the religion of the Islanders, ultimately assuming the title of Holy Sir - The Rocca, Beloved of God - much like the role of the Pope in Catholicism. He becomes the leader in the fight against the Fey and discovers that Holy Water will kill them, which reinforces the strength of their religion. Also, out of a race of people who have absolutely no knowledge or awareness of magick, Matthius comes to possess a powerful magick that he doesn't understand and doesn't want. He belongs to the most powerful class of magick wielders... he's an enchanter. Realizing that he might have something in common with the demon Fey, Matthius is offended to the core of his soul and develops a deep hatred for them. He eventually loses his faith and abjures his title of The Rocca. However, upon becoming Rocca, the secret of Holy Water was passed down to him, making him the only person on Blue Isle with the knowledge of how to make it. Having discovered that Holy Water, the only surviving secret of Roccanism, can be used as an extremely powerful weapon against the Fey, Matthius devotes his life to re-discovering the lost secrets, which he believes can be used to develop new and more powerful weapons against the Fey.
Now, considering the disparities between these two outcasts and their respective races, the obvious conclusion is that Islander and Fey must have interbred generations ago. But what about Coulter? He's a regular Islander. Maybe a little taller than the average Islander, but by no means does he stand out, and he is regarded as perfectly normal by other Islanders - except that he is also an enchanter. It becomes apparent that Coulter has the potential to be the most powerful enchanter who has ever lived, possibly even more powerful than Matthius.
Now I have to think about Scavenger's role in all of this, based on the fact that Matthius, who was born to a race of supposedly magickless beings, is an extremely powerful magick wielder. He is also is tall for his kind, resembling a Fey in all appearances except his skin color and facial features. Might not Scavenger, a Fey who is short for his kind, resembling an Islander in all but skin color and facial features, 'come into his magick' at some point, as Matthius is in the process of doing?
Here's how I imagine the series ending. Matthius, who hates Fey with all of his being and is loathe to consider that he might be magickal, like them, is eventually consumed by his hatred. Although Coulter and Matthius are technically on the same side - they're both Islanders, after all - Coulter probably dies while trying to prevent Matthius from doing something horribly stupid. Most likely, out of his extreme fear and hatred of the Fey, Matthius will try to kill King Nicholas's half Fey children, Gift and Arianna, as he killed their Fey mother, Jewel. Jewel was the only Fey who ever tried to arrive at a peaceful solution to the problem by marrying Nicholas, the King of Blue Isle, thus uniting the two empires in marriage. So, Coulter probably dies fighting for the Islanders and defending the rightful heirs to the throne of Blue Isle. Scavenger, who was outcast by the Fey and accepted by the Islanders, comes into his magick at a critical point when all seems lost. Since he has studied magick all of his life, when he finally comes into it, he is instantly just as powerful as Coulter - more so, actually, as Coulter didn't have Scavengers intimate knowledge of Fey magick. Scavenger wields his new found magickal powers to defeat Matthius, saving Gift and Arianna, but he probably dies while doing so. However, he dies happy, finally having been able to wield magick.
It'll be interesting seeing how different or similar the story turns out.