Horde and Alliance are in peace, they can group together, they can raid together, they can join the same guild, all players can visit all cities and can gain reputation from all factions.
The only way of world pvp is by duels or group(raid) duels.
BGs are war games, teams are mixed from both factions randomly.
Peace ruleset should not be a replacement of a PvE ruleset, it should be a new one.
The point of the Peace ruleset is making possible for irl friends to choose whatever race they want and to experiment with different raid setups with horde and alliance classes and racials, obtaining mounts from both factions and do all possible quests, etc.
Turtle had something similar due to low playerbase at start: horde and alliance could group and join the same guild and all AH were linked. And it worked just fine without making the game retail-like.
I would prefer “Player is neither Alliance nor Horde but a Mercenary” ruleset.
Players would be able to do every quest and see the story from both sides with one character, and they would eventually end up being friendly with one and hostile with the other faction on a Scryer vs Aldor style.
And of course it would allow everyone to group with everyone. Best of both worlds, since the story would still have its Horde vs. Alliance emphasis, and players would be able to decide if they’d be on one side or on neither.
Maybe not all horde or alliance quests should reduce reputation from the other faction only those that are directly against the other faction, like killing night elves or orcs in Ashenwale. These quests should warn the players that it comes with reputation penalty. Anything else that are against common enemies should not reduce any reputation.
The point is: players should be able to reach exalted with all playable races in the game.
However a new continent with free for all pvp would be fun. Like in EvE Online 0.0 systems. Only guild members are friendly to each other by default, any race can join to any guild and guilds can flag other guilds friendly, neutral or hostile.
That would add an interesting sandbox zone to the game.
I assume the idea is not to force onto you the rule set, but offer a separated ruleset, for those who might be interested.
I can see the value, my current classic guild is split between those who want to go alliance and those who want to go horde.