A lot of this, as unfortunate as it is, is a result of trying to tell a story in a module MMORPG format - it's difficult to have dynamic narrative such as what you're looking for when your story is constrained into a stagged If/Then/Else construction of triggers and outcomes. Much of those types of interactions become fodder for short stories or novels where there's narrative freedoms to do the kinds of things you've outlined. They made a number of leaps and bounds in that department with Legion and even with WoD (in terms of tying the story to the game), but they're not really at the point of being able to paint a living, breathing world with in-game elements just yet. For the example of Turalyon mistrusting Illidan how do you represent that in-game? An occasional angry emote toward Illidan? A sidebar-like tableau where he grouses at Illidan about killing Xe'ra? For something like that you'd want something juicy, as you said, but there's not a hook on which to place it. Perhaps it will come up again in "Before the Storm."
I think Khadgar was just shocked and appalled that Illidan had done what he did, but I don't know if he was ultimately against it (and he joins the Argus offensive himself willingly enough). I agree there's more that could be done to make WoW a more dynamic and essentially "breathing" world - and hopefully BfA takes the advances in Legion and iterates on them some more. I like seeing NPC tableaus, discussions between important characters that the PC isn't a direct party to (such as Vereesa and Alleria going on about Sylvanas on the Vindicaar). Little flourishes like that make the experience more immersive in the total sense.