Server space. Yes, you've said that. Trust me, that's not even remotely relevant given Blizz's resources.
If you don't like your 8-9 90s you've leveled, find a way to like them. Try different specs, PvP, PvE, whatever works. Otherwise, they'll just sit there and become bank toons/gatherer toons.
You can delete a toon your self. This feature does not bring anything new to the table.
That is one thing I enjoy about EVE, farming and trading in-game to buy game time
Blizzard could not possibly make it work, look at what the AH/GAH did to Diablo III.