No need to be so condescending. After all, the fact that no one seems to care about all of these things that you imagine break the faction wall is only further evidence that they aren't significant.
It's not just about the story though. First and foremost, it is about creating faction exclusive player experiences. The fact that there are a few high elves in the Alliance doesn't factor in to gameplay issues, other than to agitate a small minority of players. That agitation is a problem that can be better solved by progressing the high elf story to a conclusion rather than making them playable.