Other races get racial dialogue options, and lizard options aren't inherently better than the others. The mask of the shapeshifter is available to the rest of them as well, and honestly at that point you might as well not be an undead lizard if you aren't going to play as an undead lizard.
For combat, people who recognize you as undead should definitely have that advantage in combat, but if they don't know then why should they attempt to damage you with healing magic? It's pretty immersion breaking, so an alteration there would be much appreciated. Balancing is an issue though, so I agree undead would have to be nerfed in some way to make up for it.