The other player wanted to play a Tauren. I'm not a WoW player so he explained to me that they were cow people. What he really wanted was for me to custom create the race. I guess it wasn't enough that I already put together a list of 30 different races I would allow, he wanted me to custom build him a race. The Minotaur was a much higher ECL than our level, but I remembered the Krynn Minotaur from Dragonlance. So I allowed him to use that.
But you are absolutely right. It didn't take long for that player to throw a hissy fit over some other stupid issue and then quit. It was a constant thing with this person. I take it that you've dealt with the same sort of player?Funny how we can make a prediction like that.
This is what I mean about using acceptance of restrictions as a marker for whether someone is the sort of player I want to play with. I'm tempted to stick in some completely arbitrary restrictions just to winkle them out!

On the other side, a GM who sets no restrictions may indicate that they don't really care about their campaign, and/or that they are not going to exercise control at their table, so that it may devolve into a munchkin fest dominated by the most aggressive players. On the other hand, a completely open game may be better than the GM who sets restrictions, but then selectively relaxes them for the more aggressive/domineering players. Like the Savage Worlds zombie game where we were supposed to be 'normal people', but then one guy turns up with his ex-SAS officer - that was a warning sign. If the GM had put his foot down it would have been a much better game. Or if he'd just told us to go wild with cheesy OTT character concepts in the first place - but I think it was supposed to be a 'serious' horror game.
When I first ran 4e I allowed all sources, but then had to selectively ban or nerf stuff. My best experiences as a player have been with GMs who list a limited set of allowed sources and let the players create PCs with those. I was very impressed by the result, and adopted this approach for my own games. If I want to allow in additional material I then consult with the players, who often say 'No'. Eg I allowed the Martial Power books in my Swords & Sorcery campaign, they fit great with the theme. I then suggested allowing them in my Forgotten Realms campaign, but the players objected and I think they were right.