It does indeed! As is the way of The Wolf Cult in worgen lore, those of Duskwood and Gilneas that see it as a blessing. But even they use human form to walk through the cities unnoticed. And besides, with hearing and smell increased tenfold, the loud and smelly city would be a horrid place to be in your true form. For Raedolf, the human form serves not only as a mask to hide his identity, but a way of dulling his senses when needed.
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