Pemerton - the elf comment wasn't directed at you. As for dragons, dragons aren't just random angels as we'd see in western mythology - they're far closer to gods. Most games don't have you challenging gods ;p
Here's my issue with dwarves and orcs in an eastern setting - you'd have to do work to fit them in, and why bother when that work could just as easily go towards making it more eastern? Dark Sun didn't have orcs in it. At all. There were no orcs in it at any point in time. And yet we're being told that, thus, Dark Sun isn't D&D because of it.
Once again, my point is this - if you have the same generic races and places in it, then why would you even bother making a new setting? The whole purpose of the new setting is that it's supposed to be DIFFERENT. And in an eastern setting, there's simply no point in having elves and dwarves there when, instead, you could have other races that much more closely correspond with what comes from eastern mythology. I don't see the point in taking races VERY clearly from western mythology and trying to force them into eastern mythology. Square peg, meet circular hole. Literally - I don't see the point in trying to do that. It IS shallow, flat out - there's no deep method of watering down a new setting to the point where it's near indistinguishable from any other setting.
We're on two different wavelengths here. I'm not making a new setting, I'm expanding the concepts of the Occidental one to showcase the rest of the world as it would be in a global context. It's not so much that I'm making the world of Greyhawk more "Eastern", it's that I'm adapting the East to fit Greyhawk, just the way Gary Gygax adapted Europe.
And why on Earth would one want an Eastern setting that adheres more closely to mythology when we don't even do that with the West? Western history and mythology have been stretched, reshaped, and mixed together to produce a pseudo-medieval version that, while familiar to many, is nothing at all like real, historical Western society. Why should the Eastern setting be any more authentic?
Like Snoweel pointed out, the types of social conventions and restrictions that are not conducive to adventuring are going to be played down, or handwaved altogether. Noble samurai are going to be adventuring alongside peasant thieves, warrior monks, and Brahmins seeking enlightenment, and no one will bat an eye at this.
If I wanted a completely different and separate setting, I'd go for Rokugan or Kara-Tur, and devote my creative energies there. But I don't, because the lack of dwarves, elves and orcs makes those settings a non-starter. The setting I have in mind is not a new and different one, but an expansion of the old.
Besides which, I think this ironically makes the Orient stand out
more, because things are immediately changed with the presence of Vancian magic, orcs and dwarves, and the type of social interactions necessary for adventuring bands to flourish. Most Oriental settings take steps to distance themselves from the West, but I think it's a fun creative challenge to see how both the West and the East cope with the presence of sentient nonhumans, the "laws" of magic, so to speak, and all the traditional aspects of the D&D world. By striving for more of the same in some but not all aspects, this version of the Orient actually stands out from the pack.
This is all as I see it, of course. If you want to do it differently, be my guest.