Iksar is hands-down the better choice, in my opinion. The regen is bonkers past 50. Being able to just FD and heal faster than a sitting human just feels good. I also don't see faction as an issue. You have two of the most amazing skills in the game to make faction a non-issue: FD and Sneak. It's easy to repair the factions you'll want, anyway.
The exp penalty is a real bummer. I'll give you that one. And "iksar monk in a fungi with addy & SoS and black panther skin" is the least unique thing on the server.
So, in the end: Iksar.
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