I just saw a Paul Sage interview from E3 in which he stated that when you do a faction switch at level 50, you will only have acess to the quest npcs and NOT the players in that new faction.You are on a separate "server" so to speak.I have a few friends that are joining daggerfall while I am aldmeri and I was planning on getting to cap and then transferring to their faction so I could play with them.Sounds like that isn't going to happen now...or do they get onto my "server" when they get to cap too?

The only place where you can "meet" your friends will be inside the central open PvP region. You won't be able to see them inside any of the faction locked PvE region whatever your character will be.

There is no faction switch. When you finish your faction campaign and are level 50, you will just unlock access to the other factions areas so you can experience PvE content there. But it will be completely separated instance where only players from your own faction can play. You just won't have access to the same area instance played by the opposite faction players.