You are mixing faction balance with balance overall. Server is already kinda balance in term of faction ratio, its around 53:47 for Horde and making any changes that will lead to Alliance been less atractive faction will only incrase Horde numbers. You only look at high arena PVP, which was always been incradible small portion of population, and ignore all other aspects of the game. Also in MMORPG there will never be class/race balance, this is just a illusion people project. You will always have class/racial that perform better overall then others, this have been true since WOW exist and its still true today.
Retail works very differently today, realm dont matter besides mythic raiding. When you walk around you constantly see people from other realms, ore and herbs and so on are personal loot, you can turn off wpvp, there is no mob tagging anymore and so on and on. Faction disbalance is not wrecking the game because there is 100 other systems that counter it. Non of this exist in WRATH. If you have 70/30 ratio as alliance you are ****ed, you have hard time finding groups raids, less stuff on AH and usually more expansive, you can forget about farming spots and so on.
Warmane exist for 10 years already and PvP scene today just as active or even more active as back in the days. People quit for many reason and new people come, thats how MMORPG works. That idea of people quiting because Human is too strong dont seem to be based in reality.
Also Warmane already have statistics about pvp activities. Dont you think that the fact they refuse to even concider racial changes is very telling that PVP decline is not happening as you think?