Yes, yes, and yes!I think it's time for a paradigm shift, no longer should it be red vs blue, but it should be nations standing with themselves and their close allies.
The strong High King of the Alliance is dead. His son is noble, but lacks the strength and experience to do what must be done. The new Warchief is controversial at best, using the Horde to pursue her own goal of immortality and increasing the territory and numbers of her forsaken.
Splinter them. Obviously the former allies would stay friendly (mostly) but there'd be more story opportunities with more factions and the ability for players formerly forbidden to walk through Thunder Bluff or Darnassus or Stormwind in peace working toward the common goal or being a soldier in the Army of the Light. Imagine going on a diplomatic overture toward Thunder Bluff as a nelf, only to fight Forsaken assassins looking to keep the area destabilized lest the tide turn against her coalition in Lordaeron (which would probably still be trying to expand/increase numbers of undead)