There are in-game means like auctioning an item at the Booty Bay auctioneer, letting a friend/guildie on the opposite faction buy it and then fronting them the same amount.
Since this isn't covered by the rules is this 100% legal or illegal assuming no scamming is done, or depends on individual judgement?
You can sell to anyone, including your opposite faction characters on the neutral AH, completely legit and free from concern. It's just a 15% tax. In the old days, if both characters were on the same account, we'd send an heirloom from ally to horde character and attach gold to the mail. Haven't tried it in a couple years though.