I am quite sure that everything will be 1.12., just that the entrance to certain dungeons or zones will be blocked. Thos who stepped into MC with 1.12. or did AV will know what a big difference it makes.
Maybe the Blizz guys can´t get the old database going, maybe their team is just very small and they have no time to code it or they simply put, don´t want the authentic wow. Whatever it is, 1.12. it will be with all the negatives like xrealm and co.
I am honestly just waiting for the announcement of a xrealm dungeon Queue, we have the tavern guys already for server only queues, what stops them from enabling it crossrealm, after all sharding is there too.
In my opinion, Blizzard is missing a once in a lifetime chance here. They could have veterans play their old game and new folks their current. Giving the new folks a second game, might keep them subbed, but the old guys will most likely leave.