I'll try to keep this short, because I'm interested in hearing other peoples thoughts on this too.
The reason I love this game (though I haven't played in years, I'm sure people are tired of me talking about it all the time), is the setting and more importantly the story. For this reason, I loved the Shadowlands mechanic in the early game. It was a source of power, but with the potential of ruin (and I loved how jade was used to combat it). Players would either attempt to corrupt their clan or keep it pure, and that always interested me (tournament results corrupting a clan always sent ripples - or ruptures - through the players for a long time after). They were able to make the Shadowlands cards powerful, and were able to create powerful cards to combat the Shadowlands, adding to the tug of war with the taint. There were real potential consequences to using the power of the taint in your deck, plus there was the honour cost of using the cards that made playing too many cards could destroy you in game as well.
When they made the Shadowlands a playable faction, everything changed for the worse. The cards had to be toned down since suddenly every powerful card was playable in a deck without the honour cost limitations. Eventually, the power anti-Shadowlands cards had to be toned down so one faction didn't autolose to an Iris Festival (Destroy all Shadowlands cards <-- such a fun card to exist when playing with the taint in your deck - not when it's your whole deck). The appeal of including Shadowlands card into your deck was reduced, maybe to the point where it was only done to corrupt a clan rather than make it more powerful.
The second issue with making the Shadowlands a playable faction, is that by playing those cards, you're basically giving another faction a win. Phoenix won a tourney using Shadowlands cards and became corrupt? Yea, Shadowlands! I don't need to go into this much; it's pretty simple, and this has gotten long already.
I liked it when the Shadowlands was a horror, a powerful corrupting force that threatened to rot the empire and it's beauty. When it became just another army of dudes no stronger than any other dude, it lost it's most interesting story element; the allure and consequences of evil, and mankind's fight to overcome it or try to control it). I'm not going to talk about the Spider clan, I stopped playing a few years after they showed up, and they always felt "off" in regards to the story. I understand they had to do it to help correct the issues created by making the Shadowlands playable, I just wonder why they felt the need to remove the teeth from the Shadowlands in the first place?
I hope with FFG, we see a return the the horror of the Shadowlands. What do you think? Have we moved past the late 90's early 2000's when everyone wanted to play the bad guys? Do you think L5R will even be as interested in telling good stories with this transition?