Sadly this is just hearsay that was circulating a lot at the time. Truth is that the vulpera was being built like a player model since the start, while the sethrak was not, there was some experimentation before bfa release like allowing the sethrak wearing tabards that never evolved further and was removed in a later version before release.
The sethrak model at launch is simply not a player ready model, the texture is low resolution compared to player models, the eyes are painted on while player models have actual 3D eyes after the wod update among other things.
The work required for a playable sethrak would be something like from the NPC nightborne to the player nightborne, which was a full remake of the model, only this time we don’t really have previous player model to copy a lot of things from. But it was certainly possible that blizz would put in the work or at least so was the perception at the time.
The Mechagnomes was also referenced in the files since beta as junker gnomes, although we had no idea what they were but some speculated a player race.
The gnomes replacing the sethrak is just a theory that does not hold up.
Oh that is awesome!