The one thing I'll definitely agree with OP on is that TBC would've been better off giving the Horde goblins and the Alliance High Elves. The aesthetic difference between the Horde and the Alliance shouldn't have been so quickly tossed aside in the game's very first expansion. Visually I love the classic duality of brute, beastly races on one side, and the humanoid, noble races on the other. That's such a great theme, and I feel like both factions have slowly lost their unique aesthetic over time.
I'd always thought about a faction division sort of like this:
Alliance: Humans, Dwarves, Night Elves, High Elves, eventually Kul Tirans
Horde Orcs, Trolls, Tauren, Goblins, eventually Ogres
And, a possible third Forsaken faction: Undead humans, Banshee, Skeletal Vrykul, Darkfallen, eventually Abominations
I like the idea of the three factions getting a set of equivalent bonus races. like Kul Tirans/Ogres/Abominations (a big fat tanky race) and maybe Dryads, Centaurs and Nerubians as the polypod race
This is just completely at the top of my head though, point being that I'd greatly preferred of the factions stayed aesthetically unique and didn't become more and more bland each expansion