I mean, if you just want more alliance players, giving them better racials is a good start. Granted stoneskin and the dark iron equivalent are pretty good. Shadowmeld is very useful, and I personally think Run Wild is underrated. Granted the only statistics I found on why people create characters showed 60% do it for gameplay reasons (42% for the right class, 18% for the highest stats), 17.4% was "other", 12.6% was for looks, and 10% was just for the name (I guess like making a worgen named boneslobber or something).
As far as lore goes, I've recently given up faith of bliz writing a good story, but I guess there is always hope.
As far as the "people just want to play monstrous races"... I'm not so sure of that.
Everquest for instance had a nearly opposite breakdown, with trolls, ogres, and Iksar (lizard people) being some of the least played races. The "Evil" races had a much lower representation in general, mostly brought up by Dark Elves.
Some other interesting stuff from the EQ stats. (I think it would be really cool to see similar stats on WoW):