The classes are there already, slapping them on a different model with a few different NON-game breaking racials here and there isn't going to make a guild down Illidan or not. Why would any class quests need tuning at all? All I could see is a few new quests being added and some new trainers.
As for spreading races too thin, I think the main reason is that TBC added only 2 new options. BEs and Draenei. Hence, many many people tried them out and we're stuck with tons of both races. We're looking at the same thing when Death Knights hit. Only adding one or two options at a time is asking for a dump of interest into those two options, simply because they are new.
If class restrictions were off, we'd have:
Tauren Rogues, Priests, Warlocks, Mages, Paladins.
Undead Paladins, Hunters, Shamans, Druids.
Blood Elf Warriors, Druids, Shamans.
Troll Warlocks, Paladins, Druids.
Orc Priests, Mages, Paladins, Druids.
Night Elf Paladins, Mages, Warlocks, Shamans.
Human Hunters, Shamans, Druids.
Draenei Warlocks, Druids, Rogues.
Gnome Priests, Druids, Shamans, Paladins.
Dwarf Mages, Druids, Shamans, Warlocks.
And I probably missed a few. That's 36 totally NEW options that no one has seen before. There's so many to try that there's no way one would win out as the FoTM if a few tweaks were made. How can this idea be that bad?