I have opened thread about that bebore but I got quite good arguments which made me change my mind.
First of all the problem will be Battlegrounds. Making new battlegrounds which will include all three factions will be Chaos and hard to make. Changing older Battlegrounds by adding 3rd faction will longer the queue.
If you Participate in Battlegrounds with Horde and Alliance you cant possible be neutral ! Horde and Alliance have war between each other for Azeroth do you think it is possible to establish 3rd factions cities and not being attacked by Horde or Alliance ?
Another issue will be Reputation gain. We know that in TBC and WoLTK and even in MoP we have some reputation factions that is only for Horde/Alliance that award some cool stuff (mounts, achievements etc.) How can Neutral Faction do this reputations if they do not side with either Factions? Blizzard should add new, 3rd faction, reputation Clans where Neutral Faction will be able to farm rep. That will take lot of unnecessary time and money.
And if we make all these changes why not make totally new faction from new races and new Cities which would be located on another side of Azeroth?
Or just to shorten Alliance and Horde faction, pick some of the races from each one and make new Faction unit them in one Banner that will fight for Balance in the world and oppose both factions if they harm world (lets make them "neutral"). They would be non aggressive Faction but powerful and fearsome. Lets ruffly call them 'ancients' and unite Night elves, Trolls, Tauren, Draenei. These 4 races are near to Nature and have some strong Religion Beliefs which units them. Thy all care for Azeroth and try to "nourish" it.
But it will not happen