Besides how badly that would go, what happens if your roll an undead after this switch has been flipped? Do they level all the way up as Horde and then get tossed into this third faction when they hit cap? That's crazy. And, before you say it, that's nothing like how Pandas work.
Again, you're shoving the square peg of your storyline ideas into the round hole of game design and it's just not working. Your logistics are way off here.