Naga would just have tail barding in place of legs and boots. The texture of the armour would just wrap around the Naga and this is in fact already programmed into the game IIRC. No extra work would be required. On mounts Naga would go side-saddle, sat up-right with their tail draped over one side.
As for how a chaotic-evil race could join us, there are a few possibilities. The first (which personally I hate) is that there could be a splinter faction of good Naga, rebelling against Azshara and they end up siding with us. Personally I think this would take a lot away from the race. A second possibility is that there's a group lead by a particularly ambitious Naga who wants to usurp Azshara and perhaps isn't quite evil enough to want the whole world destroyed, so she and her followers join the Alliance and Horde. The third, and riskiest idea is that Azshara sends a group of fake defectors to join the Alliance and Horde, but when it becomes clear that we're going to win, some of them defect for real.