It is correct that retail WotLK had an amazing amount of leniency towards ninjas in dungeons/raids; they later implemented loot systems that removed the possibility. During the first few versions of the game, the game developers relied heavily on server communities to police behavior like ninjas / toxicity and it worked very well for a few reasons:
Server population was about 1/6th the size that it is on warmane. Pretty much everyone knew everyone by the time you had been on a server for over a year together. There also were a lot less guilds doing end game content by the end of the expansions (I believe my server only had about 3-4 guilds that had killed LoD by the time Cata came out). Those two things meant you had a reputation you needed to care about in order to raid, because guilds cared about their reputation and would kick / blacklist you if you were exposed as a ninja or toxic.
Additionally, it was a lot harder to get a fresh identity on retail. Blizzard didn't offer name changes until halfway through TBC at the cost of $10, faction change and realm transfer came at start of WotLK for $30 and $25 respectively. Even if you shelled out the $10 per character name change, people that had you added to friends would see your new name and could expose your new identity. The only way around paying for a new identity was making a new character and grinding up to max level at 1x XP rate, which you couldn't just power level yourself with your main unless you paid an extra $13/mo for a new account.
Warmane's ninja/harassment/racism policies are pretty much the best things they could implement to curtail behavior like that on a server this size. Otherwise, the general apathy towards those things, in addition to the anonymity granted by having a population this size, would allow behavior like that to run amok and likely make the server less appealing to most players.