...Truth-damned rpg.net short login times! I have to type this all over again...
I'm not familiar with 4e Eberron, just 3.5, but this is how I'd approach it:
Basic premise:
The idea doesn't necessarily need to be to reduce to human so much as to reduce to a minimum of humanoid races, and it makes sense that the races native to each continent are closely-related.
With that in mind, here's how I'd go about it:
Khorvaire: After the Age of Demons, Khorvaire became the land of the goblinoids. As mentioned in a prior post, the different races of goblinoid had a caste system that stemmed from their vastly differing capabilities. It's easy to imagine why the goblins in particular would get fed up with being beneath the hobgoblins and run off to found two other, different ones -- one that went back to savage roots and dinosaur-riding on the assumption that civilization was the problem, another that embraced trickery and
Xanatos Roulettes and the pursuit of knowledge on the theory that the problem was simply that civilization was not essentially
theirs. Likewise, the Gatekeeper orcs could easily become Gatekeeper hobgoblins.
Kept: Goblin, hobgoblin, bugbear.
Removed: Gnome (goblin culture), halfling (goblin culture), orc (hobgoblin culture).
Xen'drik: Some key backstory of the Eberron world happened here. This is where the dragons taught wizardry to the ancients -- giants with elven slaves in the original version -- who proceeded to make a vast empire, delve into darker and more dangerous magics as they went, fight off the quori of the previous Quor Tarai, and use their arcane might to throw Dal Quor entirely off its orbit and sever its connection to Eberron nearly completely. Then they had to deal with a slave revolt and mass emigration, followed by being nuked into the Stone Age once the dragons finished shitting themselves.
I submit that the story itself doesn't necessarily require the giants and elves to be separate races; the only thing you lose by making the giants elves is one aspect of the sheer shale of Xen'drik's ancient ruins. However, one of the cultures that emerged out of the slave refugees -- not the Tairndal of Valenar that people have been trotting out, but the Aereni -- is to my mind essentially elven. The Aereni believe in, and have perfected, harnessing the power of death, something that they believe is only made possible by the long lifespans of elvenkind. Shorter-lived races don't have enough life ahead of them to do more than hurry to get in what living they can before their own inevitable deaths; only elves can live a truly full life and overcome the fear of death, embracing it and allowing their fully-realized lives to potentially blossom into fully-realized deaths. Valenar only needs to be elven because it splintered off the same group, believing that the only lives that were truly lived best were those of their rebel ancestors.
You'll note that I haven't mentioned the drow still living in Xen'drik. That's because frankly, they're superfluous; any old elves who didn't leave the continent could have such a culture.
Kept: Elf.
Removed: Giant (elven culture), drow (elven culture).
Sarlona: This is the homeland of humankind, and in this vision of Eberron it stays that way. The events of the current Quor Tarai remain unchanged as well -- rebel quori merged with some humans to yield the kalashtar, the normal quori manipulated things in dreams to allow Sarlona's empires to fall apart and proto-empty vessels to be bred, the first quori possessions occurred and Riedra rose, Sarlona's own lycanthropic purge happened, and so on. As such, we still have, in addition to humans, kalashtar, "the Chosen" aka empty vessels, and Inspired on Sarlona. We also keep changelings and shifters, which in the Path of Inspiration are believed to be the steps just above and just beneath human respectively, not to mention that there's both subservience and rebellious revenge to explore in a Riedran shifter and changelings allow the presence of agents who could be anyone which in turn helps to further the creepy, oppressive vibe of Riedra.
Elans have a very different and very cool explanation in Eberron: they were once human, but were turned into living prisons for criminals among the quori. Elans are a cunning prison indeed: a vessel that the imprisoned quori has no control over, even as the elan unconsciously taps the quori's power to live eternally (and thus trap the victim eternally), among other minor benefits. As such, they fit neatly into the tapestry of the influence of Dal Quor on Sarlona and are best kept.
The Tashana Tundra could easily remain a refuge of rebel shifters, and so long as shifters are still around there's no reason why not; however, they could also be humans or even a mix. Syrkarn normally has a lot of half-giants and even Riedra normally has a few; however, there's no particular reason why Sarlona needs a "big" race, and logically if you replace the giants with elves then the half-giants should become half-elves anyway.
The other XPH races don't add much of anything to Sarlona's story. They're all more a case of, "This is the psionic place, so let's put them there!"
The best part? As always, Sarlona doesn't
need to have any relationship to Khorvaire at all for Khorvaire's affairs in general to make sense. If you want nothing to do with any of this psionic stuff, they can just stay on Sarlona.
Kept: Human, kalashtar, empty vessel/Chosen, Inspired, changeling, shifter, elan.
Removed: Dromite, duergar, maenad, xeph (all superfluous).
Changed: Half-giant (becomes half-elf; ripple effect of changing giants to elves)
Argonnessen: What's D&D without dragons? What's the Draconic Prophecy without dragons, for that matter? How does the way the House of Vol died make much sense without dragons? What's the big deal about dragonmarks appearing on humanoids if the great, prophecy-obsessed culture in the heart of Argonnessen isn't dragonkind? The dragons were also big movers and shakers in the ancient world before retreating to their homeland here.
Beyond that, there really isn't much
to change. The Seren tribes who worship the dragons are human anyway. All you really have to do is say that Erandis d'Vol was the only half-dragon ever, period, end of story -- which frankly makes more sense than the alternative anyway.
Kept: Dragon, human.
Removed: Anything dragon-descended that isn't a full-blooded dragon (since dragons find the idea repulsive anyway).
The Frostfell: While 4e Eberron's dwarves emerged from Khyber for, no doubt, some implied setting compliance reason, 3.5 Eberron's dwarves came from the frozen north. However, there's no compelling reason at all why they had to be dwarves -- they could just as easily be humans or changelings exiled to the far North to freeze to death long before even the kalashtar were formed (and thus before any other Sarlonan race aside from human and changeling existed) -- or even why they need to have come from outside of Khorvaire at all.
Removed: Dwarf (fill in the blank with any one of: goblin, hobgoblin, bugbear, human, changeling.)
Modern Khorvaire: It was Keith Baker's intent for changelings and doppelgangers to be one and the same anyway, so you can afford to get rid of doppelgangers as a separate race.
Half-elves have an interesting thing going for them in Khorvaire's culture; since they breed true and more half-elves are born from half-elven unions than human/elf unions these days, they by and large regard themselves as their own seperate race and call themselves the Khoravar. The fact that two of the true dragonmarks are exclusively half-elven adds fuel to this fire...
Warforged you're already sold on, so I needn't preach to the choir here.
Shifters have been argued already by others, and will I hope be argued further; as it is, I can't see what I could add to that part of the discussion at the moment.
Since orcs were changed into more hobgoblins, the question of half-hobgoblins should be brought up. Most of what makes being a half-orc cool in Eberron is basically inherited from orcs having been made cool. You arguably don't need to have half-hobgoblins to fill that gap -- just play hobgoblins, for truth's sake! They have even more past coolness to bring to the table; you can have not just descendants of Gatekeeper heroes, but of famous Dhakhanni warlords too, all in one convenient pining-for-the-glory-days package. As for what happens to House Tharashk... well, no reason why the humans who integrated with the Tharashk tribes couldn't still have developed the mark, or even why the half-race mystery couldn't change into a two-race mystery...
Kalashtar... to be honest, I've never understood why kalashtar are necessarily considered to be in Khorvaire by default to begin with. You could have Sarlonan affairs stay at home or not with equal ease.
As for all the new races? If Eberron could do without them before, it could do without them again.
Kept: Changeling, half-elf, warforged, shifter.
Removed: Doppelganger (folded into changeling), all the johnny-come-lately races (dragonborn, tiefling, eladrin, goliath, deva, etc.).
Changed: Half-orc (to hobgoblin; no orcs, no particular need for half-orcs or half-hobgoblins to cover the themes)
Optional: Kalashtar, empty vessel/Chosen, Inspired.
In conclusion (aka,
TL;DR), were I to minimize Eberron's race selection, the list would be:
Khorvarian races: human, elf, half-elf, goblin, hobgoblin, bugbear, changeling, shifter, warforged.
Sarlonan races: human, half-elf, changeling, shifter, kalashtar, empty vessel/Chosen, Inspired, elan.
Xen'drik races: elf.
Argonnessen races: human, dragon.
Cutting room floor: dwarf, gnome, halfling, half-orc, orc, doppelganger (as a separate race), giant, half-giant, drow, dromite, duergar, maenad, xeph, half-dragon (except for Vol), draconic creature, goliath, eladrin, dragonborn, tiefling, deva, anything else newfangled I forgot.
Thanks for the mental exercise!

-- Pteryx