Art Director Chris Robinson spoke on this just moments ago at the BlizzCon Open Q&A panel. It was in reply to an attendee who brought up that, in the art panel, it was explained that the pandaren model has 10 times the bone structures of the classic races, allowing for many more facial animations.
To paraphrase his statement -- which isn't too different from what I've said here on the forums before -- we absolutely plan on updating the existing models. As Chris mentioned, we want to make sure we preserve the look and feel of the original models players have come to know and love, while vastly improving their model and animation quality to be more in-line with the newer races.
We're not going to hide behind the statement that too many players will get mad if we tamper with their models, but it's a concern -- not a concern that's going to stop us from doing it, however. I want to stress as well that it's a massive undertaking to go back and do this. And to a lot of people it's something that won't be considered shiny new content. But not only do we hear the masses of players calling for this update, we really feel it's time to bring them up to par with newer models as well.
The game continues to age, but as we have no plans of slowing down on development any time in the near future, we want to keep updating and polishing it to stand the test of time (again, without sacrificing the look and feel which has brought players in over the years).
I have no other way of putting this than as an open forum letter
You keep mentioning that re-doing the models is such a mammoth task it would take major developement time from new content. Have you ever considered instead introducing the redone models all at once, release them individually as they are completed with some extra packaging like some lore exposure and/or a minor race debut? Tie them in with a patch for e.g. like 5.0.2 as It gives a fixed deadline to work towards, some breathing room because you don't have to do it all in one go with an expansion along with all the new continent/creatures/features etc..and you can really make quite an occasion out of it doing a thorough jump instead of rushed.
1. Races have been crying for model update
2. Races have been crying for a bit more in-depth lore about them and their leaders & culture (unless you're human and orc)
3. I've been dying to play variations of some races that are identical to the main race except for say a different skin colour (mag'har orc) or eye colour (high elf) and a totally different philosophy, some players may not like the orcs because of their behavoiur, but would jump to play a Mag'har orc because of the different philosophy of the minority group - plus allow you to do some interesting things in the design like for e.g. a Highbourne (a Night elf minor race) could have used a blood elf model but at night elf height with Nelf skin tones /eye textures & ears - but a blood model (i.e. face, frame, animations/movements etc.) - could allow you to do some fun things with races and introduce them with some spark.
I have a bold idea, that could be a lot of fun to the updating progress, will give fresh eyes to a race without too much extra work and would spice up immensely the unveling of the new model.