INTITIATE WALL O' TEXT.
The High Tree was originally colonized by humans and gnolls working together in an attempt to purge the land of the fey. The Killoren living at the base of the High Tree were slowly pushed back, away from their homes during a bloody century long war. The gnolls forced their way into the tree and began to hollow out its roots and base to create makeshift caves to live in and store supplies in while the war raged on. After years of digging into the tree the gnolls and the humans carved new pathways up the tree to make room for their families without giving up their defensive position. When the Killoren found out what they were doing to the High Tree they decided that they had enough.
Not being strong enough to take on both the humans and the gnolls they decided to do something rash. They woke a green dragon, and with promises of a home under the High Tree, and a constant supply of food the dragon happily accepted the offer knowing that it could easily talk them into giving it more later. The Kiloren rode back to the High Tree on the massive green dragon's back. It's roar was as deafening as a thunderclap and even more intimidating than any gnoll. Within a day there was nary a gnoll that hadn't run away with their families in tow. Some members of both races remained after the dragon retook the High Tree, and thanks to the green dragon's persuasion they had to tend to the dragon as punishment. Any gnoll or human found even relatively close to the High Tree was forced into giving shiny objects to the dragon by the Killoren. Over time giving objects to the dragon became a sign of safe passage and even the Killoren sacrificed goods to the dragon, and after ten years since they came to the dragon for help the war had ended. No one wanted to risk angering the dragon living under the High Tree, but that isn't to say that the war didn't harm the High Tree.
The High Tree was dying from where the humans and gnolls carved their pathways and the dragon wasn't helping the situation. The dragon gnawed at the roots of the High Tree on slow days where sacrifices were few, almost as if it knew that it would anger the Killoren into feeding it more the next day. The tree was dying, but no one could do anything about it while the green dragon rested in its roots. When the dragon mysteriously died not a soul within the High Tree dared admit to the killing of the dragon. They hated the dragon, but it had brought peace to them after they lost nearly everything they had known, and by then even the gnolls were living peacefully among the Killorens. What happened next amazed the Killorens.
The High Tree started growing again. The dragon decaying at the tree's roots fed the tree just as the dragon had fed on the tree. The High Tree nearly doubled in size over the next one hundred years, and it was only then showing signs of slowing. The tunnels in the tree hadn't filled, and soon everyone began building onto the tree, creating platforms and buildings that jutted from the walls of the High Tree. The dragon had surely blessed them with the gift of life with its last breath.
When the races of the High Tree began to fight again the elder of the tree had an idea. Gathering the greatest sorcerers of the tree he had a representative of each race be polymorphed into a green humanoid dragon so that no race would be able to be bias during the negotiations, and that only a representative would know their true race. After the negotiations all three agreed that they would live their lives out in their new forms in case another conflict were to arise. When a representative dies another is selected to take their place.
This is based on information gathered from several D&D books. If it doesn't fit your vision of the world, please feel free to change it.
Base races of High Tree would be Humans, Killoren, Gnolls, and maybe the odd elven migrants.
You didn't really explain what happened to the elves (I suggest they were split to the four winds becoming each of there counterparts *aquatic* and such), or why the humans and gnolls hated them. Also I don't think a polymorph spell would work. How about the place were the Green Dragon died became a sort of lazurus pit that rebirths anyone who enters into a green dragon born? That way we get to keep the rebirth thing. My only problem would be that it means that high tree would have 3 representatives, you being one of them. Hmm..
3 representatives from each area.. Each player is only 1 from each, wards being from the same "group"
The Three Dragons: High Tree
The Coast, The Shoals, and The Deep: The Great Sea
3 currently unnamed nomadic clans: The Sand
The Giants, The Dwarves, and The Snow walkers: Frostfall Mountains
The 3 kingdoms: The farlands (now an empire, but you don't know that yet, shhh)
edit- a few more ideas, how about replacing humans with raptorans? Humans are pretty much standard everywhere, it's kinda there thing.