Anyone who has played in my campaigns knows that I have a rather strong dislike of non-human and ESPECIALLY of half breed player characters. I despise any setting where dwarves, elves, and humans live all on the same block of your average city. I've always preferred more racially xenophobic settings.
The civil rights movement took off almost half a century ago. In the year 2010, as the palest white guy most people will ever meet, there are certain areas of NYC(one of the supposedly, most cosmopolitan cities in the modern world) I will not go into unless I'm armed, especially after dark.
I realize that elves, dwarves, gnomes, and half elves are part of the game, but I've always felt that by putting them in the hands of the average player I seem to get, it takes away some of the mystery and magic of the non-humans.
An elf isn't just a guy with spock ears who can see in the dark, s/he's the embodiment of the world's magic. They're capricious as the fae, as old as dirt, and not someone I would ever want watching my non-existant kids. I've always seen elves as something like how David Bowie portrayed Jareth, the Goblin King in Labyrinth. The elves from WoW just seem too human in terms of emotion and motivation. The archetypal elf in my campaigns is similar to the Sidhelien from the Birthright Setting(right down to occasionally hunting the "lesser species").
Dwarves are the strength of the earth, crumbling under the weight of their history. Their world is driven by their greed, pride, loyalty to their ancestors, and their hatreds/grudges. A dwarf is obsessive in his pursuits compared to even the most dedicated human. The difference between fighting a weasel and a dwarf is that the weasel lets go when its dead, a dwarf just grips harder.
Gnomes are slightly more personable, as they embody curiosity. Their curiosity isn't (always) stupid however, and a group of gnomes would likely be watching a group for weeks before anyone even knew they were being watched. This doesn't mean that they'll jump on the bandwagon, far from it. Humans would be seen as far too darkly minded, too weak willed to be anything more than temporary allies at best, little more than large pale goblins whom the Gnomes war with fairly often.
Halfings are at once the most open and xenophobic races out there, and the best way to get halfling culture is to see them as the jews of Anatevka from Fiddler on the Roof, their days ruled by traditions handed down since the very first halflings. The traditions have been altered so as to not too greatly offend the humans, dwarves, or elves they live near. Ultimately though, they just want to live in peace, being left alone to their own devices.
Half elves. of the 3 "standard" half breed races present in 2nd edition core D&D, this is my least favorite. However, one of my players seems to refuse to play a "stupid human" and only wants to play thieves. Since Elves have a stronger penalty, and halflings don't appeal to her, she chose the half elf route. As such we had to come up with a reason as to why this walking abomination should even be allowed. I do happen to like the old stories about the Fae. One of which in particular caught my eye. Changelings. Changelings are Fae children switched with human babies so that humans end up raising a fae child rather than their own human child. This works out surprisingly well for half elves, so in the borderlands campaign, no human realizes that half elves are actually Half elf and half human, believing them instead to be creatures born to the fae, upon whom magics are wrought to make them appear more human. The Elves know the truth of the matter, but they DO NOT talk about it, not even to other elves, as it is a great shame to the entire race that they are able to breed with humans.
Half Orcs make the most sense for half breeds. Where they come from is obvious; orc warbands come in raping and enslaving people, and the result is the many half orcs left behind. Most of these "demon spawn" would be killed outright, but given the irrationality of the maternal instinct, some of them are allowed to grow up. Given that orcs themselves tend to just be a harsh reflection of the very worst qualities of human males, this is the one half breed I'm likely to allow without much effort. That doesn't mean I'm going to take it easy on them however. They are still half ORC, and that means humans are not going to like them very much.
Half Ogres are a bit tricky. Ogre culture is entirely based on laziness and an un-controllable rage and anger. In addition, it's hard to imagine them even being born as most ogres would rather eat humans than breed with them. Either way, the end result is a person akin to Norse Berserkers; large, strong, dangerous, and always angry(not necessarily always enraged, but a sense of anger would always seem to project itself from them). Those few who aren't killed are likely raised outside of town where they're less of a threat to the village population. I can imagine them only being allowed in major cities if they submit to having "handlers"(ie, fully armed guards) escort them during their stay, and being asked to leave before nightfall.