I don't give a damn about my bad reputation!

Something else that has cropped up whilst playing WoW: What is the point of the reputation system? Okay, so it's kinda cool to see a character progress through Azeroth and making an impression as they go, and to see whose worth hanging around but my beef with the reptuatation system is that it seems to go against the lore that Blizzard established for themselves.

Allow me to explain: In World of Warcraft, out of all the races available, the only one's that seem in any way antagonistic are the Humans, Night Elves, Orcs and Undead (fittingly, all three playable races in Warcraft 3). As for everyone else, they're all bound together by their respective alliances - yet that doesn't make them in any way friends. And in the case of the the Horde, most of the races therein have been victimized and so they've gathered together in a show of unity. But the unity is showing cracks leaving many races distrustful of one another.

So with all that considered, what does my reputation prove? I like using the Blood Elves and they're distrusted by the other Horde races due to their magical prowess - although the BE's do share some kind of common ground with the Undead. Through Rithendal I have only reached Exalted status with one racial faction and it's one of the undead factions - fitting but in terms of lore not surprising.
So in lore terms what happens when Rithendal reaches Exalted status with another race? Do race relations soften? Do they recognize someone decent in a sea of idiots? Or will achieving Exalted states do nothing to prevent knives in the back?

I don't know - most likely through playing other RPGs, I've become accustomed to making world-shattering changes in the world presented before me. And such changes may be something beyond the scope of a MMORPGer....