As I said several times before, Factions need to be merged.
Horde and Alliance need to join together. It makes no sense that one has not absorbed, conquered or destroyed the other by this point in the story.
Merge the Factions, then create two more minor factions that are PvP-centric containing the hot-heads from the previous un-merged Factions and give them quests and stories and continuing Battlegrounds.
Pledging allegiance to a minor faction doesn’t take you out of the main faction, just flips on War-Mode.
Faction population balance problem solved.
The story can progress without the constant repeated trope of Horde/Alliance fight. Big bad shows up, they unite, say all is happy. Kill the BBEG, and go right back to fighting like nothing had ever happened.
Now you can have proxy wars, and intrigue, and politics, and all the juicy little sub-plots that your Writers can go ham with without breaking the lore, or faction motivations, or entire zones and histories.
Now nobody cares what racials are, because they don’t impact faction, raid, or PvP balance since you can stack OP racial #4 however much you want and the other side can do it too until it is balanced.
Or better yet, get rid of racial abilities as tied to race all together, and instead give us training focuses that we choose in their place. As a human why am I gregarious and out-spoken as my racial? Why can’t I be a gruff mean 'ole …person of indeterminate parentage… that nobody likes but can fly into a berserk rage at the drop of a hat?
Why does the Orc who watched Thrall on parade through the newly crafted streets of Orgrimmar after the battle of Mt. Hyjal and witnessed the generosity of Lady Jaina Proudmoore as she tried to build peace between Orc and Human as a child unable to focus his life on the ideals of these two persons forced to only care about wielding an axe instead of learning languages and becoming a respected diplomat between the various city-states. Becoming well-spoken and more likable than others.
Merge the factions, turn racials into something that can be chosen (at a cost, but NOT time-gated), and permanently fix these issues.