I think it would be great to have some sort of class betrayal questline. As someone who's done it on Everquest 2 a few times, I can give you the "mechanics" on how it works. You initiate a conversation with the betrayal NPC, then you do a series of quests by working against your own faction (spying, spreading propaganda, etc). Once that is complete, you end up in a "neutral town" called Haven, then you have to go earn trust with one of the major cities (i.e. good/evil side) to get back to a normal life. You earn their trust by a long series of quests, good cities may be pickup up trash outside, helping townsfolks. Evil cities get by with torture and mayhem, helping their army, etc (for those EQ2 players, the quest chain to live in Neriak (drow city) is very twisted). Once you complete all the quests, you are given your final reminder that when you switch, you (in most cases) will be switching classes (Shadowknight to Paladin, Warlock to Wizard, etc). You then gain all the abilities/skills of the new class and lose your old ones.
Star Wars has plenty of examples of side-swapping. Non-Jedi classes could easily do something along the lines above, while Jedi could seek a path of redemption or fall. As a light side Sith myself, I think it would really bring a great deal of depth to my own character to have the ability to join the Jedi order, or stay hidden and work behind the scenes as a Sith. It would definatley add to the options available for anyone - and an in-game method to switch would be better lore-wise, than just forking over $$ for a faction change. The only real issue I see is having to be done with your class story. I think it would be a bit of a pickle to switch during the middle of your class quest somehow, unless that was integrated into the quest chain to set you at the start of a particular chapter, then you work through the chain from there. Some of the side-specific titles can stay, others need to be swapped out (class based titles).