Few points of clarification based on some discussion we've been seeing around the interwebs:
On racials: The current intention is that the system swaps your race entirely, including your racial ability. We recognize that that puts Humans in a weird spot, so we're looking into some options there that aren't "spend your Honor/Conquest on a Medallion."
Only the faction that is currently experiencing a long queue will have the option to act as a Mercenary, and only when those queues reach a certain point (which is still being determined). In the current environment, we expect that to generally be Alliance. Since queues have to reach that threshold before Mercenary Mode becomes available, we don't anticipate an increase in Horde queue times.
Using the Mercenary Mode system is completely opt-in. It's important to us that if you don't choose to participate in Mercenary Mode, it doesn't affect you. Should you be grouped with players who are using the system, they will not be identified to you as mercenaries -- they'll look like just another player from your faction.
Similarly, it's important to note that these are not creating "mixed-faction" scenarios. There will be no Humans fighting alongside Orcs. Again, our intent is that you are completely unaware that the person next to you is secretly a Night Elf.
We don't consider Mercenary Mode to be a replacement for racial balance. We just also don't think that perfectly balanced racials would instantly resolve queue time issues. We also don't think that players should feel forced to faction transfer (potentially away from friends and guildmates) in order to experience reasonable queue times.
The picture in the blog is of one of the NPCs that Alliance players can speak to to activate Mercenary Mode for Battlegrounds. Players who are using Mercenary Mode won't just be wearing a Hallow's End mask, lol.
Ultimately, this system's sole purpose is to help resolve the issue where heavy tilts in faction populations can result in excessively long queue times for unrated PvP content.
