Okay so, I SUCKED up my pride and did a BG as horde using mercenary. Here's what I learned.
You get a buff put on you called "Mercenary Contract" and it lasts 30 minutes as well as a level 100 trinket called [Mercenary's Medallion of Adaptation]. Yes it req's lvl 100.
As a paladin I got turned into a blood elf, I had learned the blood elf racial and lost the human one. I put on my insignia of the alliance, not horde, and was all good.
I wasn't able to use my human paladin mount, because I was a blood elf of course, or any other alliance mount.
I wasn't able to use horde mounts. Period.
Can't use gear that requires you to be horde.
BUT! When I was in the BG I had been wearing a Stormpike Battle Tabard, it was changed into the horde version cosmetically.
Alliance Battle standard is still named Alliance Battle standard when dropped, but horde on team do get bonuses for it, it appears as an friendly to them.
Not sure if blizzard will fix any of the small bugs, I will update this post as I learn more.