Thing is, Shiri, I think you're talking from a combat point of view. RP wise there is no better or worse faeling, they're as they were meant to be. Small, fragile, disgustingly agile and nimble.

Even stanced, I never once dodged when I tested my 18 dex.

Ialie won't be the only true faeling left in Serenwilde. 

The level 3 balance was not intended for the Shadowlords. I suggested it in reference to them, but Estarra told me that Faelings were always supposed to have it since the beginning. That is why faelings in general got it rather than (what I suggested) just the shadowlord faelings.

City and commune races are not exclusive to their land. A faeling outside of Glomdoring is just as good now as he was a month ago. If there ever was a tae'dae commune to open (which could also have been the race for Glomdoring; it had to be a nature-oriented race since Glomd oring is based on nature magics) then existing tae'dae would still be just as good in their respective guilds as before. So from game mechanics, there is not really a change. If you chose a race before Glomdoring because you wanted the commune bonus then you should have chosen elfen, merian, or viscanti, not tae'dae, faeling, etc.

The only real thing I can see here causing controversy is players who think that their race's existing position should be left untouched or those who think that a race only deserves to exist in its specialized city, thus "downgrading" the value of being a Seren faeling. The first controversy is unavoidable and will probably happen when the next commune opens or new cities open (other than the obvious Hallifax and Gaudiguch). Had we chosen furrikin or tae'dae, or even mugwump naturalists (Glomdoring can be swampy), etc., all of which were viable choices, some members of those races would be annoyed while some happy. Indeed, even giving elfen multiple commune specializations between the two would be controversial for those elfen players that think elfen should be a pure noble race, and are traitors to the realm for enslaving the fae, and for non-elfen that say it's unfair for elfen to have two specizialized locations. As for diminishing faeling value in Serenwilde, note that if we open a furrikin commune or a tae'dae commune then they will still be just as at home in Serenwilde and Glomdoring if that's where they currently are. The best place of value should be determined by your character's worldview. If you are a faeling who loves nature but hates evil then Serenwilde is still the best place for you. Similarly, if you are an elfen who wishes to enslave nature and rule the world with an iron fist, Glomdoring is the best place for you.

How about racial balancing. You guys seem to always miss that when thinking up controversies. There are so many inferior races right now, and so many subpar races compared to others. That's the controversy. In one fell swoop you made Elfen Lords even more subpar as  a warrior choice, and completely obsoleted Aslarans.
You have extreme balance issues right now with the races.

...It's an intentional misbalance. There is no issue. The specialized choices are meant to be more powerful than the unspecialized choices. Over time, other races will gain specializations and be brought on par. Minor concerns might currently exist, but "extreme balance issues" is just inaccurate.

No, Faelings are now encouraged to go to Glomdoring or remain substandard.

They will become most common in the one place they should be most scarce in.