and as usual, not enough answers. I'm still stuck on how I want to treat Half-Elves and Half-Orcs, and if/how I want to tweak Gnomes to differentiate them from Dwarves, mechanically speaking. So here's a quick brainstorming session with no resolution.
1) Change nothing. Leave the mechanics the same and integrate bi-racial characters into the lore.
2) Throw out half races all together.
3) Doing a little thievery from 3e, have Gnomes be able to cast a cantrip per day and remove their magic saving throw bonus. I am on the fence about this for a few reasons. Originality for one. More importantly, what does a race of people who are all (or nearly all) capable of casting a cantrip per day look like? What if each of us could perform some minor feat of magic every day? I sure as hell wouldn't have to go to Goodyear if my damn tire runs flat. Regardless, it does give 'flexibility' to a Gnome. Meaning, it easily explains them as a 'tinkering' race that can use magic in their crafts and other pursuits.
4) Re-imagine. Change any or all of the races in question into a new trope. Think fey "lawn gnomes," changelings, some sort of lycanthrope (Human by day, Orc/Elf by night or some other cycle), maybe mimic OD&D's Elf race/class and have a Half-Elf/Orc choose to "be" a Human/Elf/Orc per day or adventuring session. Basically, a total overhaul.
So what option is best? My ultimate goal is to help differentiate these races. Gnomes and Dwarves have very similar mechanics, Half-Elves are watered down versions of Elves, and the same with Half-Orcs. So is a chance necessary to introduce meaningful choices, or is it a moot point?