My only comment on this is that I hope Blizzard allows us to change our character gender at the same time - because the thought of being a male Belfadin just makes me cringe. I don't want jazz hands. I like being John Travolta in plate. Oh the humanity....
When I first heard the news of this, I was more than a little shocked. I suppose it makes sense in a way - but really? Faction changes? Will my rep change over? What about my mounts? Faction pets? How can I be a gnomish engineer if I'm Horde? And thank goodness for guards in the cities. I deleted my Horde toons long ago simply because I couldn't find anything. Undercity is confusing as hell.
One thing I do know - that hunter that keeps bitching about needing a space goat will have to finally gear for that missing hit. I hate him.
Which brings up an interesting point in and of itself. Currently we cannot change races within our own faction, presumably because it would result in an influx of change from the min/max crowd. PvPers might choose Humans for Alliance for the extra trinket slot, raiders might choose Draenai for the racial % to hit. Horde tanks would all become Tauren (though the stam buff isn't as huge as it was in Vanilla), and in general we'd see a lot of flipping every time a racial changed and EJ came up with a new min/max.
The balance will be a bit off though - three races of Alliance Paladins becoming Belfs, and the reverse for shamans. With the addition of axes to the rogue utility belt, you might see more orc rogues (personally I like the concept of Cannibalize) or Troll hunters.
Good or bad - I have a feeling I'll have jazz hands soon.