I wonder how well it would work to make kobolds as something evolved from the small, fast, predatory types of dinosaurs? They could be warm-blooded but scaley, with feathers but no wings (although subspecies who fly or glide are always possible), and a handful, to several extremely old, but also extremely static, stable, and primitive-seeming; civilizations that would maybe have access to plenty of food and basic resources--to keep them alive and well through Worldgen, and some interesting/Fun cultural things, and knowledge of lots of poisons, medicines, Fun facts, etc.
As the game grows, they could then grow right along with it, since it can be supposed that they'd have learned quite a few magical secrets, had many encounters with even the strangest monsters, undead, and HFS, and might have access to potent artifacts, horrific guardian beasts, truly bizarre gods and god-pretenders from out of the very dawn of time itself, and plants, medicines, poisons, and treasures that simply can be found nowhere else.
That way, they could have real exoticism, and be opened up for a lot of creativity and usefulness within the game, and that balance, against the areas in which they are primitive, would lift them out of the dullness of the abject poverty they're currently in. It would also make them fun trading partners, and a lot more interesting as either enemies, or even allies.
I admit I'm taking a few (but obvious) nods from the Slaan in Warhammer, but there's a great deal that can be done with the basic idea of "MesoAmerican Lizardmen", and in my opinion, Warhammer is right up there with Dungeons & Dragons in time-honoured fantasy establishments.
And yes, they themselves were inspired by real-world folklore, so no creative toes are being stepped on here.
Unlike the Slaan, I see kobolds as being individualistic, and independent.Young kobolds would be born into a world of endless predators and enemies, and the society they're born into would be too old and too jaded to give fools and weaklings very much encouragement.
They would be anything but a single civilization with a single broad goal.
As mentioned briefly above, I envision maybe as many as a dozen or more small but heavily populated, inward-looking and introverted, citystates, Dwarf-like in their paranoia, and skill with (aboveground atleast) stonework/architecture, and with a strong tendancy towards meritocracies. Each might contain scores of cultural subgroups, and even several sub-species, and there would be constant, low-level infighting between them. Rule by HFS wouldn't be rare, but HFS wouldn't be held in anything like the awe and fear that might hold a goblin city in check. Kobolds have been there, done that, and as a species, they've even outlasted gods. Monarchies and dictatorships would be the exception, with powerful councils of experienced elders a general rule.
Finally, I see kobolds as potentially immortal--and if they live long enough, eventually transforming into dragons. This might only occur after a thousand years, or something likem that, to keep the numbers down.
Dragons, once transformed, would forever exile themselves from the kobold civilization Proper-they'd become highly territorial and aggressive, would kill other kobolds on sight, to protect their own extremely valuable genetic material, and would also begin hibernating for long periods of time-but it would only be these matured beings who would mate and produce offspring.
The few strongest survivors (once born, the kobolds would fight among themselves, killing off the weak) would then, something a bit like sea turtles, flee the Dragon Lair, and hope to eventually find refuge within the gates of the kobold citadels.