Mulhorand was one of my favourite empires. It wasn't backwards, it had advanced enigeering, mathmatics, libraries, art, and most of all magic, both divine and arcane. It was xenophobic with outsider ideas, but it had thousands of years of research and advanced knoweldge given to them by gods.
Thay got much of its basics in magic as well from Mulhorand and its tech. Thay did go in other directions afterwards.
Mulhorand was perfect for campaigns invovling theocractic intrigue. Oh and Mulhorand did use iron. Mulhorand faught powerful empires and often won, hence why,until the spellplague Mulhorand had never been conquered in its long history. It wasn't just the gods, who had thier power greatly reduced thanks to the imaskri and later the orc gods. Mulhorand still relied on its armies.
As for Mulhorand not fitting in, Mulhorand and Uther founded most of the nations in that region. You also find all kinds earth like cultures on Toril, such as viking, Inuit, African, celtic, East Indian, Arabian, Turkish, not just reniasance european, and in Kara tur you also had Japanese, Chinese, Korean, Mongolean extra fits. This is thanks to the Imaskri, Calim, Memmon, and possibly the Batrachi and LeShay kidnapping human's from earth. Earth and Toril have a long,history together unlike other D&D setting.
Some human cultures are native to Toril, such as Nethril, but many human and non human,immigranted earth and other worlds, its part of the reason its called the Forgotten Realms.
People think FR has no theme, not realizing its right in the name. It has a theme. Its why you have earth deities such as Loviator, Silvanus, Tyr, ect... because empires dead and forgotten realms on, earth still survived on Toril. That and Toril had many dead and forgotten realms of its own.
People think Toril is just another kitchen sink setting like Greyhawk or Golarian, instead of a setting with theme, like Eberron, Ravenloft, and Darksun, but they're wrong, although FR's particular theme allows it some of the advantages of a kitchen sink setting.
Sorry for the rant, its just bugs me that people don't get its theme when its looking them right in the eyes.
FORGOTTEN REALMS.