I don't see it ever happening in WoW; it's one of those changes that is just too large a change. But I think multiple factions would be a very good thing for an eventual WoW 2. I know that Blizzard is on record as liking the fundamental Human vs. Orc conflict, but I think it adds real dynamism into the world.

A perennial, fundamental complaint about WoW is that the factions make very little sense. ("Why are we working with THEM?") Blizzard tries to address this by adding intra-faction conflict, but what the game really needs is smaller, tighter factions that players can develop more of a sense of identity and pride in. These factions could then be part of a scheme of shifting alliances (e.g. perhaps the Horde genuinely does try to help the Forsaken, but after an incident like the Wrathgate, moves to open war.)

Perhaps two factions are at open war in one Battleground, but have come to a reluctant truce to cooperate against a greater threat in a place like Outland or Northrend. Some factions could tend towards neutrality, while others tend to be much more hostile.

With Pandaren choosing which faction to belong to, the ability to have one race belong to two different factions is very interesting.

It would be interesting to see the world undergo a large jump forward in time and momentous change on the order of what happened in the Third War. Then the slate would be wide open to tell stories of shifting alliances, new enmities, and other changes that would revitalize the game.

Just a few possibilities:

A traditional core Alliance, of Humans, Gnomes, and Dwarves, representing the typical nobility and arrogance of that group.

A warlike, honour-based, shamanistic Horde of Orcs, Tauren, Trolls.

A Holy Light-focused combination of the Argent Crusade and the Aldor.

A combination of the Cenarion Circle and the Earthen Ring with strong representation from Night Elves, Worgen, Tauren, Orcs, and Trolls.

A magic-focused nation of Dalaran, dominated by high/blood elves, humans, Shen'dralar, and Forsaken.

A dark empire composed of Forsaken and trolls, with slaves from other races.

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