I think you should be able to mix two races with a proper history, backstory, desc, and obviously RP.
Making ogres with a mild resistance to fire, and mild bonuses with fire.
Autofly elves, with a mild air vuln.
Mmmmmm.
half breeds everywhere!
Dibs on first ogre dwarf
Edit: or better yet, minotaur drow reaver warrior
You guys so silly.
coughmin-maxing issues galorecough
Can I has my demon-avatar mix plz?
Sure. You're cursed, so no recalls ever, with one wing so you can't fly, and such inner turmoil you are only aggressive in self mutilating to condeath.
:-p
J.Twedrist recently told me a joke that is relevant here..
A masochist looks over to a sadist and says, "HURT ME!"
to which the sadist calmly replied, "..no."
Why do you get to pick the bonuses/penalties? Maybe your a half minotaur/ogre with crappy horns, AND a magic vuln. Would be AWESOME to see some of the stuff imms can come up with for it. Imagine half-demons, Half-Illithids? AWESOME rp potential. Min-maxing is just as present now as it would be with any changes. Everyone is expirementing with these new beasts to see what type of hidden power combo they can come up with.
Tell me you would not love to make a half storm giant paladin Pali. Or you f0xx, a half dwarf blm?
I do believe that half illithids would not be possible, as they are genderless and do not reproduce in the normal sense. 
I guess I just don't see the pros of this idea outweighing the cons. To make these kinds of things commonplace, its assuming a lot of things about how often two races will mingle in that manner. However, many of the races in the game hold a very deep racial prejudice against most other races of the world.
Even if they mingle, if they are too far apart genetically, there would not be any offspring. If there is a half-breed race, that means that the two partent races are close, genetically.
Tell me you would not love to make a half storm giant paladin Pali. Or you f0xx' date=' a half dwarf blm?[/quote']
I can do that now with a restring without balance issues cropping up.