So, if each core set has a total of 6 expansions accompanying them, then will we still be able to mix cards from the first "sets" with the new core sets/expansion sets? What I am getting at here is game balance; once Khazad-Dum drops (and all the expansions for it) if I am allowed to mix all those cards with my Mirkwood sets, will my decks be "overpowered" against let's say, the Mirkwood block quests? Hope this makes sense. Will they restrict cards to particular sets?

As far as I see it Khazad-Dum is no core set. It is announced as deluxe expansion. What this means I do not know. But as it comes with only two heroes it is certainly not a stand alone product.

Wheter there may be restrictions or not - keep in in mind the golden rule: if cards do not fit your game style, don't use them. I for myself am troubled with bilbo and frodo hunting Gollum. So I don't use them.

No, you can use all the player cards together, it's a Living Card Game!

If it's like the other LCGs (and it seems to be), all cards will be legal to use. Mix and match to your heart's content!