The big incentive to pet battling in WoW is that you can take on the appearance of your pet using the magic pet mirror. You can wear it in battle by then using ai-li's skymirror on yourself after using the magic pet mirror, however, the skymirror gives you a shimmer effect and it lasts for only 10 minutes per hour. So while its really cool to look like the nightmare treat (a blackened treant with red glowing eyes and red claws), its still a shimmer and just for 10 minutes.
Blizzard can provide LOTS of incentive by gating some improved magic pet mirror toys into the pet battle achievements.
Proposed new rewards:
Achievement level 1: Complete the following acehivements: That's a Lot of Pet Food (collect 400 pets), World Safari, Broken Isles Safari, and Family Familiar
Reward: An upgraded version of the magic pet mirror toy that persists in combat. (lasts 10 minutes, but NO shimmer like you get with the skymirror)
Achievement level 2: Complete Achievement level 1, Wailing Critters, collect all Wailing Critters pets, Celestial Family, earn the Tamer Crazy Cat Lady/Man, and Zookeeper titles
Reward: Another upgraded version of the magic pet mirror toy that persists in combat and lasts 30 minutes instead of 10.
As they add more achievements, pet battle dungeons, and other activities, here are future upgrades to the magic pet mirror:
1. persists in combat, lasts 1 hour instead of 30.
2. persists in combat, cooldown reduced to 30 minutes, lasts 10 minutes.
3. persists in combat, cooldown reduced to 10 minutes, lasts 10 miuntes.
4. persists in combat, makes you TWICE the size of the mirrored pet, lasts 10 minutes, cooldown 1 hour.
5. persists in combat, 2x size, lasts 30 minutes.
6. persists in combat, 2x size, lasts 1 hour.
7. persists in combat, 2x size, cooldown 10 minutes, lasts 10 minutes.
8. persists in combat, can be used on you OR ANOTHER PLAYER to gift your pet appearance to someone else, lasts 10 minutes, cooldown 1 hour
8. persists in combat, can gift image to others, lasts 30 minutes
etc, etc
There's lots of uprgades to the mirror you can make, if its done incrementally, which should provide tons of content for people who enjoy the transforms.