Was Nathanos ever actually considered killed in canon? You were given a quest to kill him, but considering he was also a major quest hub for Horde players, you often saw piles of Alliance skeletons around his little house more often than not.
Horde lost pretty much its more nuanced and interesting NPC to the dreaded curse of neutrality, and then he was turned into a fricking Mary Sue on top of that. Cata in general was pretty awful for factions gaining interesting NPCs (most of the interesting NPCs introduced were in neutral factions), but at least Varian went from being a human Garrosh into a character that's deeper than a kiddie pool. Now he's more like a shallow end character. Progress!"No loss of faction pride"? There was nothing BUT loss of faction priode for the Alliance in Catclysm. There should have been balance...there wasn't.
Probably a response to complaints that blood elves had no real plot elements since TBC, and even those were fairly minor past a certain point. I'm kind of surprised they put high elves on the Alliance side of things rather than the squids or worgen. Then again, they needed magic types, and humans are way overdone on that end, leaving only elves.And becoming more so strangely enough. It was a big complaint during Wrath that the HElfs got more storytime than some PC races. In a way, its a bit strange to see them pushed so aggressivly here.
EJL
Besides, it also gives reason for the PvP quests, considering the blood elves hate the little high elf pansies.