Your ruleset decides who you can play with, and switching rulesets means a new character.
- Group, dungeon and raid only with the same ruleset and faction. Cross-ruleset grouping is not supported.
- Battlegrounds may mix rulesets. Hardcore stays out of that mix, and other rulesets do not flow into it.
- A different ruleset means a new character. A dead Hardcore character can transfer to another ruleset, including PvP.
- On the PvP ruleset, character creation is one faction. Normal, Roleplaying and Hardcore allow both. A faction creation limit can happen.
Unconfirmed the thresholds for a faction creation limit.
Source Blizzard's ruleset article.