Transmog is here, but optional
In the World of Warcraft: Forever What's Next panel, Blizzard confirmed that transmog is available in the game. It remains an option rather than a requirement.
The idea: you decide what you want to see from other players. If you want to see transmogs, you turn the option on. If you prefer the classic look of the gear that is actually worn, you can disable transmogs for all players and see the base models of the items instead.
That way both groups can play the way they like: collectors who want to customise their look, and players who want to keep the original appearance of gear.
The option in the panel
The slide from the panel shows how Blizzard presented the setting. The announcement did not name further details, such as exactly where it sits in the menu.
Original report: Wowhead