The character should have a choice of changing sides easily at start. A first choice at noob island should have no penalties. After that, the longer one stays with any of the 3 factions the less likely it is to be accepted by the others, this would be further influenced by the actions of the character. Actions against any of the factions should make changing to that faction more difficult. A system where changing from one faction to any of the others could be implemented. But there should be serious consequences in doing so. I think the time needed to change faction should get higher with level, kill count on that faction (both PvM and PvP).
Let me give an example. The character arrives in noob island and starts as an OT employee. Changing sides there is easy (to clan or neut), returning to OT should also be easy, with maybe the need to wait one hour before writing another application form. After that each new change would still be possible but the waiting time increasing greatly each time and with a maximum number of changes of 3 or something.
After leaving the island, changing to another faction would require more and more time. The time needed would be influenced by the level of the player, number of people of that faction killed (PvP and PvM kills) and shadowland factions added. It would have to be ingame time and have a maximum level to be possible to change. Also the number of kills would have a limit after which it would not be possible to change faction.
In practical terms, it should be very easy to change to any other faction in noob island and get harder and harder after leaving it. After some time going back to any other faction should be impossible. By all means lets have the option to become neutral again. Just not at endgame.