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WoW was the first to do only two major factions, instead of three. This worked out much better, for balance. You didn't have anyone ganging up on the little guy either. It also made the game more interesting. This also proved to be a far more popular design, as seen by how many people got into it.
In WoW, you had Alliance vs Horde. If they were to have done capture points in the open world, it would have been far more hectic than if you had a third faction.
A 100 vs 100 battle (if they had that in WoW)...all even. This is epic. But then if there was a 3rd faction, they'd come along and greatly overbalance one side and the battle becomes no fun anymore. The only people who would have fun are the one that pwn the now greatly outnumbered side.
Three factions can never be balanced, as seen in DAOC. One faction is always greatly outnumbered and gets pwned all the time...they can't play the game or capture anything, because the two sides always go after them as they are easy pickings. This will be even more true with the modern MMO crowd, who always choose the 1 (or 2) most popular sides and want the easy pickings of the weak faction.
That is never a problem with 2 factions, as WoW proved.
(edit: Also look at GW2. It has three servers against each other, but one server is ALWAYS getting pwned so badly. Most badly I've seen thus far is one server had 200k points, another 190k points and the third had a measly 6k points. This again would be vastly different in a server vs setup, and not a three way server battle).
So I think they should have the 3rd faction be AI controlled only, so they don't have to redesign or get rid of anything. An AI controlled faction would be rather interesting anyway.