Neutrality in factions started with the Steamwheedle Cartel and only got worse. It seems that once you get to the level cap, most of the intense rivalry between the factions, at least as expressed in the PvE game, peter off to nothing. Almost every faction accepts both Horde and Alliance fighters. In Burning Crusade, they even share the same capital, and it looks like that will be happening again in WoTLK with Dalaran -- despite that fact that, 50 levels earlier, the Horde utterly devastated Dalaran's holdings in Silverpine Forest and Hillsbrad.
The general argument for this change is that at higher levels, most people learn to put aside their differences and fight the greater challenges that threaten to wipe both sides out. My problem with that line of reasoning is that up until the end game, what we're trying to wipe out is each other.
In the Ghostlands, the Night Elves are involved in extensive operations to attack the Blood Elves. In Ashenvale, the Horde is constantly attacking the Night Elves, including setting up spy posts and killing their animal companions. In the southern Barrens, the Dwarves are willing to wipe out the Tauren to set up their excavations. In Lordaeron, the Forsaken have the stated intent of wiping out the alliance, devastating one settlement and even making a preliminary attack against Southshore.
Sure, you can say the rivalry still exists to some small degree in Battlegrounds and World PvP objectives, but for the most part, these objectives, which never permanently switch hands and are isolated in their own corner of the world, do not feel connected to the greater world and greater lore of the game, especially since they are never acknowledged or referred to by faction leaders or the world at large, for the most part.
So what happens? Why are all of these life and death struggle suddenly less important than the ones at level 70?
You can always just go out and gank the other side, yes, but with no greater story conflict to put it into, it just feels like a giant game with no real impact on the world itself, especially when it comes to battlegrounds, where the action is completely isolated from the larger world. There's not even a physical "home base" for the Eye of the Storm battleground where we can see the Blood Elf and Draenei preparing for battle, and none of the world PvP objectives besides Halaa have really had any solid story built around them other than a lone daily quest giver and a few vendors.
Honestly, I get the feeling that the biggest reason is probably because it makes it easier on the dev team. If you only have to make one faction with one set of quests that can be used by both sides, you've cut design time in half. Unfortunately, doing that gives us stuff like redneck treasure hunters at Zul'aman when we could have had a Blood Elf vs. High Elf face off.
At some point, all this homogenization between factions just gets tedious -- and it gets to the point where one wonders why I shouldn't just be allowed to group with the other side. We're killing the same mobs for the same reason at this point, you might as well just let us do it together and make it easier on both of us. When a Forsaken and a Human on a PvE server who choose never to go to BGs can basically follow the same quest path on a daily basis, kill the same mobs, gather the same quest items, and turn them in to the same quest giver, and never have the ability or occasion to attack or kill each other, something feels like it's been lost from the early game storyline.
Don't get me wrong, I enjoy some of the neutral factions, such as the Consortium or the Argent Dawn, that have a genuinely unique or epic feel to them, but we only need maybe 1 of those per an expansion, maybe 2. It's when we start overloading them as we have done thus far that everything starts to feel homogenized. Right now, I'm having a tough time seeing why every single level 70 end game faction or quest needs to be for both sides.
It may be a bit late for WoTLK, but I'd like to challenge Blizzard to bring back the Horde vs. Alliance rivalry at the level cap for real: Not in a World PvP objective that will only provide a temporary buff and won't have any larger meaning or impact to the overall world storyline, not in a battleground that will be completely isolated from the rest of the game world, but in a real extension of the various faction rivalry story lines from earlier in our career, and an acknowledgment of the separate natures of the Horde and the Alliance sides that extends to all aspects of the game and the world story, both PvE and PvP alike.
I'm not going to use such a trite line as "put back the war in World of Warcraft" or anything, but I would like to see an overall acknowledgment that the two sides are not only different, but have some very essential differences and conflicts that put them at war, and that things aren't so simple that they can drop everything and "band together for the greater good" on almost front at every end-game dungeon or raid or co-exist in the same capital city with no issues.
Or, if that isn't an option, at least just let me kill my 25 zombies a day with that Tauren Shaman over there who's doing the same quest for the same quest giver and make it easier on both of us.