Yes, they should.
But the idea of factions as they are now is ridiculous. I would prefer to see everyone stick together as they are, but shift from rigid “factions” to organizations.
I’d prefer to see Orgrimmar and Stormwind open up to the other factions, for grouping between them to be enabled and for communication to be standardized.
I think there should be a lot of benefits for being in your organization beyond just mounts, fashion and more. There could be stuff you could access in the open: Goblin auctioneers if you’re Horde, Night Elf travel cloaks that turn you invisible for the Alliance, stuff like that.
I like the idea of factions, but I’d like them as an expansive feature.