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Hutaakan Facts and Ideasby Håvard Faanes
According to the Lupin Article from Dragon Magazine, some Hutaakan stayed behind and did not enter their secret Valley.
Some of these interbred with the Gnolls, the offspring eventually evolving into the Lupin Race.
The novel, The Black Vessel mentions Hutaakans living alongside Gnolls on the Savage Coast and in fact believing that they too are Gnolls.
My idea is this. Since Lupins are now quite a large race, even if it is only 2000 years old, there must have been quite a few Hutaakan Gnoll interbreeds from the start.
Extrapolation: Hutaakans were not limited to the Black Peak Mts. They were found also in the Dwarfgate Mts, Ostland Hills and perhaps even on the Savage Coast. Most of these lands were eventually overrun with Gnolls, resulting in many proto-Lupins being born.
In Karameikos, there evolved three fractions of Hutaakans. 1) The Masters, this was the dominant fraction, consisting of at least half of the Traladara- Hutaakans. These were under the leadership of the High Priest of Pflarr, although the High Priest was never what Pflarr hoped he would become, but rather a greedy coward. 2)The Mentor Fraction, these were the ones who wished to help the Traldar.
Including Zirchev's Teacher. 3) The Anarchists. These, learning the arrival of the Gnolls, welcomed them and sought to manipulate the raging Gnolls and gain power from it. Both group 2 & 3 stayed behind when the high Priest's followers retreated to the Secret Vallet and other Hidden Cities. Both of the groups interbred with Gnolls (willingly or not), producing proto-Lupin offspring. No True Hutaakans remained in the Outer World, except for those who hid in the cities or lived alongside the Gnolls. The rest were either killed or transported to the HW. The proto-Lupin offspring were left in the Outer World, but Pflarr keeps an eye on them hoping that they will become what the Hutaakans never were.
Another idea: We know that the Gnoll were created through manipulating Goblinoids. What if Pflarr himself and later the Hutaakans were also "purified" Kobolds. Mystaran Kobolds have always been portrayed as doglike anyways, rather than lizard-like as in 3e.
This also puts an interesting light to the Kobold info in the Northern Reaches Gazetteer where some believe that Kobolds are actually a major race. Also the Shining Armour the Shining One found when he was a mortal Kobold could have been a gift from Pflarr....