That's wrong
Maybe u didn't play on retail while tbc but racials were always the most important reason why ppl play a race. Human and udeads were always prefered, cz double trinket or forsaken-spell, that give u more burst or a secondary insi in pvp/arena
The same effect was in pve, where ppl played worgen for 1% more crit=1% more dps. Trolls were prefered too cz 20% haste bonus in burst=also more dps
Server died in retail cz blizzard didn't do anything and gave ppl fraction change/server change so more and more ppl left one side (especially in wotlk/cata). U were also inactive so ppl left one side cz the effect of playing horde (racials) was more dominant than playing alliance. It's the point that horde had more ppl at start and an imbalance was on outland. That was the beginning of the vicious circle.
Bgs have long queue (horde), many ppl are leveling (alliance)-->ganking-->more and more alliance players are leaving
To block making horde chars is the wrong way, cz u are responsable for this vicious circle too. U didn't neither watch on retail, why server died nor u react as fast as possible. U only act and tried anything after some staff member also had problems of completing quests. You were the gm, who said that ganking doesn't exist in a large context=ppl don't leave cz ganking
And u are also responsable why ppl are annoyed cz u won't give a motiavtion to play alliance. It's more to ruin game with ideas like fraction queues (alliance disappears from server), racials stay in same state and blocking horde chars.
Give alliance a bonus on reputation/profession skills, leveling or honor points and don't say at each time, u are care of server and awares are the wrong way. Ppl don't have a motivation to play alliance, watch pvp ladder (arena), many udeads (racial), and also watch the state of posts in forum (ganking). You just punish all new ppl instead of solving the problem, where u said, that there is no problem and all is fine.