This is probably a good example of less is more. The "niceness" of allowing wood-elves as an option for say, warriors, probably outweighs the number of times that a newbie picks it thinking it'll be cool only to find out its fairly crippled compared to other warriors.

It's logical to think that a 400XP penalty char must have a lot better stuff than a 0XP penalty char or 100XP penalty char.