I think they can acknowledge the differences while everyone is physically in the same place at the same time.
The way I'd envision a Priest hub would probably be combined with the Paladin hub and be run by the Argent Crusade. There currently is an inaccessible section of coastline north of Stratholme, so that would work as well as anywhere. Then you'd have delegations present from all the different flavors of Priests and Paladins. So you'd have a Loa Priest over here, some Sunwalkers over there, a few Priestesses of the Moon over there, etc. All would have dialogue sequences on their own beliefs. Very few actual quests would be shared between Paladins and Priests, and some quests would be restricted to specific or a narrow range of races.