I think i am misunderstanding your post, maybe it's cus im only on my third cup of coffee and its only 8:33AM. Are you saying each race should get to choose which faction they should be on?
No.
The problem with the current implementation is that it doesn't leave any room for intraracial factional differences, all while attempting to represent that in a very weak manner.
The "subraces" idea would have been far more successful than this, and would have given Blizzard the ability to add subcustomization options with little pomp and circumstance.
Now we have "slots" to fill and people argue about anything. It also makes every new race a "candidate" for an Allied Race, inadvertently making some of these "factions" less appealing.
We should have been able to just pick a race to start, then choose a faction within that race to start, and then be associated with the Alliance or Horde based on those choices.
So Blood Elves would be renamed to ... let's say Thalassian.
Then if you pick Thalassian you get to choose between Blood Elves, Void Elves, and High Elves.
Blood Elves are Horde.
High Elves are Alliance.
Void Elves have no default faction. You can go either Horde or Alliance.
Now you have room for more "subraces" too. Undead High Elves could make an appearance. San'layn.
Night Elves could get an Undead Night Elf "subrace" for the Horde.
And the only differences would be aesthetic and one unique ability difference just to establish that distinction.
The "new" races would just be new races out of this scope. Vulpera would fall under a new race as would Sethrak. That they use existing animation rigs is arbitrary. That's not what should define a race.
In other words, the character creation system is divided on character animations at this point. Nothing else, when it should be about the lore of the character.