Cross faction PvE play seems the most likely solution from previous interview answers, but that also seemed their last resort.
During the World of Warcraft Q&A panel, Game Director Ion Hazzikostas stated there are no current short term plans to address faction imbalance, although he recognized that it is an ongoing issue and a top priority. Calling it an issue of social dynamics more than one of balance, he called the Alliance and Horde factions pillars of the Warcraft franchise and not something they could just brush away, but they had begun to ask what they could do to improve the situation, similar to Mercenary Mode, that might address the issue.
Any chance we might someday be able to group with our Horde and Alliance friends, the way our faction leaders have done?
Oh Heather, look at that — it looks like we’re out of time. [He smiles]
God damn it.
[laughs] We are obviously aware that it’s a problem. The challenge is, at this point, primarily a social one. There isn’t a mechanical advantage to being one faction or the other.
But the division between Horde and Alliance has been such an integral part of World of Warcraft. We are grappling with reconciling that with the natural desire to play with your friends, or have more-ready access to groups. But we have nothing to announce at this point.
I believe a faction merge was ruled out as the game just can’t support it.