Racial armor would be just annoying, getting cool loot which you can't use because you picked the wrong race in the beginning. Going around the problem with crafting and such still drains the fun out of the game. Sure 1% of the player base doesn't want simplifications such as this, but why go through the extra effort that makes the game worse for 99% of the players?
It's not that hard: You can buy loot, get more drops, find it in the world, get it from boxes and chests, and/or craft it......
No morphing would actually encourage players to get out and do more than just kill things and they might actually have to think :P and think about how to use the limited resources that is specific racial armor drops they find.
Also, I it seems to be much more than 1% ... I don't know if we're close to 50% but it's at least a quarter of us I'd say.