Alzrius, I disagree that I'm being hysterical. Once TSR forced the meta-setting onto every 2e product, players started coming forward all the time wanting to play Race X from Setting Y in Campaign Z. Suddenly I had players clamouring to play Kender in a Greyhawk campaign. Or Krynnish Minotaurs in my homebrew.
And all the way along, TSR is telling them, "Go ahead. Your DM, if he's playing D&D, should allow this. After all, all the planes connect, so, why not yours?" It led to an awful lot of mix and match campaigns that I really think made for bad games.
I disagree with your disagreement; I think that is a pretty hysterical overstatement of the issue...presuming that it could even be considered an issue at all.
First of all, there's no combination of particular races and settings that will lead to intrinsically bad games. You seem to think that there's some sort of combination of "kender, muls, and baurier playing in the Forgotten Realms" that will somehow objectively lead to a bad game for everyone involved. That's nonsense, of course, since the tastes, desires, and role-playing abilities of the players involved will be different every time. You're making an objective value judgment where none is possible.
Moreover, this is (as others have noted) not an issue of setting, but an issue of players vs. GMs. If the GM doesn't want there to be a particular crossover in his campaign, even if by the book such a thing is possible, he just has to say so. If players don't respect the GMs invoking of Rule 0 - at least insofar as the GM is trying to set up a particular campaign - then they're called problem players. That has nothing to do with the canon.
On the flipside of the coin, there's also something to be said for PC exceptionalism. I've read plenty of threads where, when the PCs ask to be a one-in-a-million race, with some intricate backstory for how they got where they are, people agree that it's not necessarily a vice to let the PC be something different/special. The problems come when the GM has a good reason for disallowing that anyway, and the player won't respect that.
In other words, there needs to be some mutual respect between what the players want and what the GMs want, and if there's a conflict then someone should know when to acquiesce (usually, to me, that should be the player).
I mean, if you're playing in a Forgotten Realms (2e) campaign, and the player is high enough level to cast planar travel spells, then, by the book, he should be able to start hopping around different settings.
Again, this isn't a setting-specific complaint. It's just another variation of the old "I can't GM the group anymore once they have magical travel available - they're just
teleporting everywhere and ruining my campaign!"
I'd much, much prefer settings to remain distinct, at least in publication. If you want to mix and match your home game? Go right ahead. But, it's harder to start taking your chocolate out of my peanut butter after the fact. Particularly if I want to buy things like supplements and modules, all of which are going to assume a level of mixing that is not applicable to my game.
I don't get why I have to do the work of taking Planescape, or whatever, out of my setting, just so you can have it. You're the one who wants to play Planescape, shouldn't you be the one who has to do the work? Why does my Savage Tide AP end in a giant Planescape setting when it's set in Greyhawk? Shouldn't my Savage Tide AP end in a Greyhawk specfic setting? Sure, it might be in the Abyss, but, what's this Eladrin Court and Gwynharrwyf (sp) doing in there?
The "assumed level of mixing" was always exceptionally marginal. Crossovers were comparatively few - and even the meta-settings had a relatively small amount of direct crossovers.
As for "why should you have to do the work" the answer is...why not? If some people want something, and others don't want it, whichever way it goes down will leave one group unhappy, and they'll have to do the work to change it. So why not you and yours then? After all, there's already a rich history of lore and canon to the game, so it makes more sense to default to that than not to.
That's without saying that this poll, and the poll results that WotC took recently, seem to be a pretty clear indicator that more people want that lore than don't want it (yes, standard disclaimer about how accurate these polls are, but so far they're the best we have to go on).