I'm well aware that Bethesda has announced that vampire and werewolves would be enemy only, but I think they would be missing out if they didn't allow players to gain vampire lord and werewolf states. It would make for more interesting gameplay, at least. I think it would provide entertaining player choices, especially if players were able to spread their afflictions, but I will go more into that in a bit.

From a story standpoint, it would be interesting to see players experience Vampire lord and Werewolf storylines 1000 years before the events of Skyrim. Player gets infected/turned, he chooses to cleanse it or let himself transform, and then it would open up a questline to reveal a lot of lore behind both species. From a gameplay stand point, both states wouldn't be that game breaking. A few extra spells and passive abilities, transform states, and extra vulnerabilities. Classes would strive to play mostly the same, except vamps/wolves got some extra strengths and weaknesses.

Having Werewolf/Vampire lord factions would be cool, as well as Dawnguard and Silver Hand factions for uninfected players. These factions could open up some fun PvP possibilities. I think it would also be neat to be allowed to turn fellow players. Got a guildie who is a vampire lord/werewolf? You can ask him to turn you. If your playing in pvp as a vamp/wolf, you could infect enemy players with the infliction, where they could then cleanse it, or turn. If a massive amount of players became infected, then perhaps world events could open up, like vampire purges or werewolf hunts that players could choose to participate in.

I mean, these are all hypothetical ideas. They wouldn't be the "core" of what an Elder Scrolls mmo could be. Just some fun, on the side stuff.