Agreed, they'll live around Hyjal and the Well of Eternity lake at the base of the world tree not actually in the world tree itself. I mean it's silly to think they'll go live in a tree .. AGAIN.
My thinks they'll build a capital with buildings etc and have the tree huge and tall at the end of the line at the peak where the well is, there seems to be some city like ruins there anyway. They could live in the tree, but really?