(Continuing on from the previous posts here and here, as well as some of my thoughts on gnomes here and here. Unlike its namesake, hopefully this installment won't be a tepid retread with Mako in a minor role.)
In my quest to build the perfect portable gaming kit, I decided that where the rules are concerned I need something small and lightweight - not just mechanically, but physically. White Box (a digest-sized and very beautifully laid out redesign of Swords & Wizardry White Box) fits the bill, and it's dirt cheap too. If my players insist on adding additional classes, it's pretty easy to integrate the ones from Swords & Wizardry Complete, and only slightly more difficult to add the few additional ones (bard and illusionist) that aren't found there.
Where the species available to characters are concerned, I've finally found a solution. The inspiration for dwarves came largely from John Higgins' comments on one of the posts linked above; the inspiration for elves came partly from The Elder Scrolls video games, and partly from a blog post which I can't seem to find at the moment.
Dwarves, as a species, encompass three distinct subspecies: burrow dwarves (also known as gnomes), hill dwarves (also known as hobbits or halflings), and mountain dwarves.
Elves, as a species, encompass four subspecies: green elves (also known as orcs), grey elves, high elves, and wood elves.
This neatly solves the issue of class restrictions in old-school games. If one only uses the core four classes, the selection can be summed up in two phrases: dwarves can't be magic-users, elves can't be clerics. The former can be justified by their strong saving throws against magic, while the latter has some interesting justification in my own campaign setting.
This also avoids having to come up with "balanced" abilities for each non-human species. If I add special vision abilities (which White Box doesn't have by default - even dwarves can't see in the dark!) then I'll just give dwarves infravision, and elves ultravision.
As pointed out in that post I can't find, both elves and orcs having the ability to produce offspring with humans suggests that the former two belong ultimately to the same species. This dovetails nicely with my conception of elves as a totally separate species from humans. They can have offspring, but those offspring (like mules) will be sterile. And like in The Lord of the Rings, there's no need to have a mechanically distinct "half-elf" or "half-orc" species.
And as for orcs being magic-users? Well, in BECMI/the Rules Cyclopedia, orcs are listed among the monster types that can have wiccas/wokani among them (I can see why they changed the name for the RC - even TSR wasn't that deaf to the culture of the time.) I don't like having otherwise normal NPCs who can do things that PCs can't, so here we are. If I were to assign such things mechanically, I'd say that orcs tend towards necromancy, grey elves evocation/invocation, high elves alteration, and wood elves abjuration.