I'm fairly certain I had characters on both sides in WoW also, but I've slept a lot of nights since then.
People will exploit regardless. Make it single-faction only and they'll run dual accounts on the same server, they'll coordinate with friends playing other factions, they'll probably do a thousand other things I've never even thought of. It's an ego boost to a lot of guys, for whatever reason, and they'll do whatever it takes, honest or otherwise.
Personally, I think you need to have cross-faction servers, and I think it's great that the legacy carries over, so I'm recognizable as me regardless of which side I'm playing.
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