What do you think the faction make up would be if they where realigned? Being there will be 12 factions soon you could go for a 3rd faction but that would leave a great deal of game play imbalance. So the ideal break up would be four factions of three each. Easier to balance that way as I see it.
So, in my mind only of course, this is how I would start to break up the new four factions.
Dwarf and Gnome go hand in hand. That is the closest connection in the game as I see it. If anything I always thought of them as one in the same really and as if the Alliance only had 4 races while the Horde had 5. So they are going to start our first new faction.
Tauren and Night Elf are another natural connection even if not nearly as strong as the Dwarf/Gnome connection. Just look at Cenarion Circle/Expedition and D.E.T.H.A, they are Tauren/Night Elf to begin with.
So that is where we start. To fill out these factions you need to find who fits with them best. I would think the Humans would fit best with the Dwarf/Gnome faction because that is a fantasy thing that has gone through time. So there we have our first new faction.
For the second faction we need to think of who would fit best in the Tauren/Night Elf collection. I've come up with three options in my mind. Worgen, Troll and Draenei seem the only options here.
Draenei because they really never fit with the Alliance to begin with and they really mesh with any of the other factions either. When it comes to honor they seem to be the closes to Tauren.
Troll because just like Tauren they never really seemed to belong in the Horde. Troll's should be leading their own empire and not the lap dog of an Orc Leader. Personal opinions as they may be but I think they should have killed the leadership of the Horde while they slept and taken over the whole ball of wax a long time ago.
Worgen however will have to get the nod to join this faction however because if it were not for the Night Elf people they would not even be a faction. Not to mention I think that a faction where 2 members are already shape shifters would be a better fit for a natural shape shifter.
That leaves us with would basically be the left overs. Orcs, Undead, Draenei, Goblin, Troll and Blood Elf.
The way I would see this splitting up would be the Orcs and Undead teaming up and the Draenei and the Blood Elf teaming up. Both cases would be a lesser of two evils thing. Orcs would be using the Undead and the Undead would be using the Orcs. Draenei and Blood Elf are already connected by an expansion pack and can continue that as they both keep an eye on each other.
For which the last two would go to it is easier to make the decision after I broke them up as I did. The Orc and Undead team up will keep them both using each other for their singular goals. A Goblin can surely understand that because their goal is to make money. So they would fit well in a group that would only be using each other anyway. This leaves the Trolls with the Draenei and Blood Elf races. In a way this does make a lot of sense. They have all been displaced so even in disagreements they would have a common center to fall back on.
So my new four factions as I see them would be.
I personally think that would be the best break down should they ever decided to expand on factions and break up the groups as we know them. Eventually I could see the two faction system re assembling again in the future after this with the Horde and Alliance joining and the Cenarion and Outcasts joining. Heck, in my opinion, with those two joinings of the split four it would make a lot more sense to me to begin with.