I've been running a Dawnforge game for a while, and after I held off on 4E purely because I'm cheap and had enough invested in 3E, I'm coming around and looking at the same idea.
But not that much of the basic system seems transferable between 3E and 4E. The world and history can very easily be used, I think all you have to do is put a decaying kingdom of dragon born in the Tamerland and define the elves vs eladrin to be dawn vs night elves. Using just the basic 4E rules, you can use the regions and history with the 4E PC races and classes.
Yes, you lose alot of the races and legendary points and classes, but they don't transfer exactly. 4E action points and paragon paths kinda replace those concepts, you already have a bonus for success with extra action points and the classes all have specialized upper level paths to follow. Would action points that let a characer buy anouther action point slot so your PCs being able to have two action points after an extended rest overbalance the PC power?
If you really want to run monsters as PCs, haven't the 4E rules on that come out already? The monsters are still there as advesaries and can easily be used for an entire campain. Stop the orcs with goblin horde invasion, hunt the black circle operatives with white circle help, prevent the Yuan-ti counter strike on the dominion, etc. Gnomes can become elven mooks, and lizardmen become dragonborn mooks.
And as for the racial talents and transformation, 4E already has the level by level accumulation of power, so all you need is racial feats or powers to offer. Those books will be out eventually, or you could try making racial powers for each class as an alternative to the standard class powers. If you start adding powers and feats on top of the base class abilities you'll have to come up with your own method of increasing the 4E ecl based on what you let players get. Anybody got any idea what scale for granted power in a feat should be on the new 4E rules?
The way I'd do it is minimal work, make sure every one has the idea of early times, give the book for regions and history, imply a time of dragon empires before the rise of the giant empire drove them across the sea (giants hunting dragons is in the book), and have it's remnants in the tamerland be dragon born ruling over lizardmen, a newlly discovered legacy to add to the histroy from the book. This way you have the implication racial understanding is new, kingdoms are still rising and being established, war lurks on the horizon, but there is also a more in-depth concept of ancient history and empires to create ruins and old magic, etc. so you can more easily use new modules.
You've had months to try this, what happened? what did you try? anything not working or anything specific you'd like an idea for working in?