Merc mode should be added to the PvP interface and allow players to opt in (similar to WM). You should remain your actual race. A “mercenary” doesn’t artificially transform in order to accept a contract. This is particularly applicable given the increasing amount of lore in which the two factions cooperate, even to partake in intrafactional combat.
This is also already possible within DF wPvP areas, and in the past was done via Ordos and N’Zoth. Do that, and only match premade vs premade.