And boy are they doing it. As we knew, Desolace and Azshara are getting revamped completely, while Feralas is in for some questing changes and zones like Loch Modan are seeing some "light" modification. Blizzard apparently looked at each zone and determined where it lay on the list of todos: Azshara is becoming the 10-20 Horde zone and so will get reworked extensively, but Silithus, while it may need work, probably won't get more than a few tweaks.
Afrasiabi also talks about the surprising origin of phasing and Blizzard's philosophy. More after the break.
Get this -- phasing, the revolutionary technology that allows Blizzard to make a more transitive MMO than ever, started out as one of those 180,000 bugs. After a programmer came up with a way to fix a bug in Blade's Edge that allowed different people to see different things happening in the world, they later decided to use that bugfix as the foundation for the death knight starting area, largely considered one of the best experiences in the game.
Afrasiabi says that Blizzard does know what they're doing (he specifically says they aren't making it up as they go along, forum trolls take note), but from what he describes, it does seem like the process is very organic -- one idea is had, and then it's used in other places and other ways until they've developed something that seems completely different. Blizzard has been criticized in the past for some of their design ideas (the work they do, just in terms of an art and gameplay sense, does tend to borrow a lot from what's come before it), but Afrasiabi does the right thing in the end: he lets the work talk for itself. Blizzard may have borrowed the MMO form from a lot of different places, but no one can argue that what they've done with it hasn't turned out to be extremely impressive.
World of Warcraft: Cataclysm will destroy Azeroth as we know it. Nothing will be the same. In WoW.com's Guide to Cataclysm you can find out everything you need to know about WoW's third expansion. From Goblins and Worgens to Mastery and Guild changes, it's all there for your cataclysmic enjoyment.