Blizzard is implementing a faction switching service.
There is no immediate indication if this will be a free service or a pay service, however based on their past name change, character appearance, and server transfer services it likely will carry with it a small fee.
People have been talking about the ability for characters to switch races and factions for a long time. It appears to finally be here. Neth mentions that "the basic idea is that players will be able to use the service to transform an existing character into a roughly equivalent character of the opposing faction on the same realm."
She goes on to say that this will be carefully orchestrated to limit the impact in gameplay, and that they don't have all the details worked out yet. There are a lot of things to work out in this – mounts, quests, tabards, pets, achievements, etc... You don't really want to see a Blood Elf Paladin riding around on a Human Charger.
Stay tuned for more information on this very cool change as it's released.
The full announcement after the break.