I think the best solution should be, that you can go to the other side′s cities and talk with other faction′s people. But if you enter a "PVP" area or if it′s "WAR PERIOD" you cant, and you may or may not be attacked on sight by the enemy side if you cross them.
That could be a good solution
That would be even worse. TES is all about freedom and interaction. I can like who I want, kill who I want, whenever I want. It's just down to me to deal with the consequences. Designated PVP areas and enforced safe zones are restrictions.
There was a time before WoW when factions were created by players. They were like guilds, but guilds could ally to form super guilds, if you will, and fight together for a common goal and purpose. The thing about player goals and politics is they're always shifting and changing. So alliances and power struggles are always shifting and changing.
The advantages of player created factions: natural leaders are elected (and so almost always respected); the political scene is always shifting, as various factions temporarily ally to bring down more influential and powerful ones; players work together based on shared beliefs and political agenda, or through fostered friendships, regardless of race. Not because they chose to play as a Nord and no matter what they think they HAVE to kill any Breton or Redguards they come across just because the game tells them to.
The disadvantages of player created factions: joining a powerful faction usually requires proving your dedication to PVP, in a similar way that joining a top raiding guild requires proof of skill and dedication to PVE; Smaller factions formed amongst friends for casual purposes would likely never get the opportunity to siege the Imperial City (unless a powerful faction was looking for support from smaller factions to boost numbers for cannon fodder - all's fair in love and war).
So there are certainly reasons to consider pre-defined factions in order to control the balance between three powers and allow more involvement for casual players. But that's at the expense of a dynamic, player-driven political environment. I would also argue that casual players probably wouldn't expect to be able to invade the Imperial City, and could quite easily have a lot of fun capturing strategic towers and farms around Cyrodiil with their friends.