Alright, I was thinking a little more about all this.
Mythic or Fabled are probably better titles for the Rank 7 Champions. Because if you called the Good-Aligned Champions Divine, you'd probably want to call the Evil-Aligned Champions Infernal. And Divine or Infernal could possibly the next and last tier of Champions, if the designers ever decide to make a rank/level 8/80 in the game. Which I kind of hope they don't.
Okay, so some players might feel too limited by the idea that they can't use all Champions on any team. Well, there could be a solution. A new section could be introduced/implemented called Allegiance Trials. There would 4-6 areas with 3-5 stages in each area. However, in order for a Champion to pass the Allegiance Trials, he or she would have to be accompanied by a Champion belonging to the Faction to which the Champion wanted to switch. Only two Champions could be used, and three stars would need to be earned on every stage before the specific Champion could pass the trial and switch to another Faction.
There would be 4 levels - Normal, Hard, Brutal, and Nightmare. So the Champion could switch, switch back, switch, switch back up unto a maximum of 4 times. Normal switches the Champion to the new Faction, Hard switches him or her back, Brutal switches to another opposing Faction, while Nightmare switches back. And, by completing Nightmare with the Champion, the switch back will then also apply to all duplicates of that Champion that the player owns or obtains in the future. Now, Normal would have 3 areas with 5 stages or it would have 4-6 areas with 3 stages. Hard would either add an area or add a stage to each area. Brutal and Nightmare would do the same. Either add a new area or add a stage to each area. So Nightmare would either have 6 areas with 5 stages, or it would have 3 areas with 7 stages. (I think. If I didn't make a mistake adding that stuff up in my head.)
Now theoretical Divine/Infernal Rank 8 Champions would not be able to change Factions, Alliances, or Alignments (Good or Evil).
Mythic or Fabled Rank 7 Champions change would be able to change Faction, but they couldn't change Alliance or Alignment.
Legendary could change Faction or Alliance, but wouldn't be able to change Alignment.
Epic and Rare could change all, Faction, Alliance, and Alignment.
Of course, Rares would already be able to team up with any Faction, Alliance, or Alignment, but some other Champions would refuse to be on the same team with them.
OR instead of total restriction on which kind of teams certain Ranks of Champions could be on, there could be penalties. (Though Divine/Infernal would still refuse to be teamed with anyone not in their own Faction).
Mythic/Fabled Penalties - Opposing Alignment & Opposing Alliance - Large Penalty / Different Alliance of the same Alignment, Moderate Penalty / Different Faction of the same Alliance, Small Penalty
Legendary Penalties - Opposing Alignment & Opposing Alliance, Moderate Penalty / Different Alliance of the same Alignment, Small Penalty / Different Faction of the Same Alignment, No Penalty
Epic Penalties - Opposing Alignment & Opposing Alliance, Small Penalty / Difference Alliance or Different Faction of the same Alignment - No Penalties
Rare - No Penalties
Also, the Penalties would stack for each individual Champion on the team.
EDIT: Okay, you wouldn't need to earn three stars to complete the Allegiance Trial. Actually, I don't think you should earn stars in the Trials. And you should be able to bring up to three Champions of the Faction to which your Champion is trying to switch. There would be no Champion drops and the gear drops would be randomized from among the same sets that drop in the Campaign Battles.