They probably cancelled the feature so they could put as many hands on deck to get WoD pushed out the door ASAP. Which, well, makes sense-given that the past two expansions had unacceptably long tails at the end, they know this time they need to actually get it out at a decent time, and I think for the first time in their lives are actually working under a time constraint. It might not be one put on them by anyone, but since they've been dropping, rather than gaining subs, they don't want to take any chances regardless of how big they still are.
As for faction imbalance, they should really look at Rift and just offer cross-faction guilds and groups. That won't help PvP servers, but absolutely *nothing* they do will help the high pop PvP servers with severe imbalance; unless they connect high-pop realms that's a lost cause. At LEAST they could solve half the issue of guild recruitment and such for PvE if they'd just put in cross-faction. It's apparent story-wise; the war is over, the next bunch of WoW is going to be Azeroth vs. Bad Guys, and it would be the most sensible thing they can do gameplay wise. With this, the higher-pop unbalanced PvE servers would at least have the more populated faction open for recruitment. Wouldn't again be a perfect fix, but it would be another attempt at some kinda fix. (Would deal with issues with racials as well, since you no longer would have to all jump to a faction because of certain racials. I'd like them to take out some of the racials anyway and leave the fun ones, but they seem adverse to that for some reason.)
Blizz have always been a strange company-they don't mind doing some drastic changes but then are afraid to pull the trigger on others(which are arguably more positive changes sometimes.)