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I was thinking of starting A Wood Elves army, and I wanted my fluff to center around evil, possible Undead (no rule changes, just model art) WE's who have begun using the Lore of the Undead to bolster their ranks. My idea focuses around the Shadow Glades, the WE's who have entered them, "never to be seen again". Maybe Coeddil is forming an army aligned with the Undead Legions to further his goals, using these WE's who have entered his territory as troops. Take down the WE'S, reclaim his forests, and aid the Legion in their eventual battle to replace the chaos gods. It's all a stretch, I know but I would consider it possible. What do you guys think? Any major plot problems with this? If so, do you guys have any suggestions to make this fluff work?

I can think of wyldwood spirits, and of the remains of the corpses reanimated by Kemmler during his winter assault.
You could use a giant squirrel to represent a terrorgheist.

Something to remember, the Wildwood Fey were essential in the Resurrection of Nagash. As in, it wouldn't of happened without them. In the end times book, it's said Drycha just ''turned up'' to Manfredd the Vamp and gave him the Fey Enchantress for his ritual, asked for nothing in return and fled. This infers that the Wild Wood Fey have some plan based around Nagash's rise.

Boom, there is your fluff. Raising a Legion within Athel Loren seems unlikely ti happen without being noticed, but raising a Legion to overthrow Athel Loren is perfectly believable. It seems to me that it was Drycha that had her claw in the rotting of the Oak of Ages, so she is trying to kill Ariel. And to do that, you need a Legion!

rotting of the Oak of Ages

I would say, that was Alkhor's little present. Too bad, corruption of Athel Loren is not to be mentioned anywhere, besides Orion books.

The End Times fluff book mentions that when Nagash was resurrected Death Magic flooded the entire world, and that the Oak of Ages was found to be rotting and full of Maggots.

So. I start wood elves & lizardmen, and they go on an exodus, and athel Loren dies...

Time for me to start chaos dwarves.

Not dead, dying. At the end of the Book it has Allariel (the current Everqueen) coming through the World Roots from Ulthuan to Athel Loren to ask for help. They say they will help on the condition that Allariel help Ariel, who is sickening in the rotting Oak of Ages. So last we hear is that Allariel descends into the roots of the Oak of Ages to meet with Ariel as the door closes behind her. Oh, we also find out the Sisters of Twilight are Ariels babies

So there is actually a connection already, ready to go. That's great. Makes it less "out there". Raising an army of dead (or perhaps death worshiping) Wood Elves with the new lore would be plausible. Time to start forming an army list.

rotting and full of Maggots.

Alkhor was a greater daemon of Nurgle, who corrupted entire Loren forest, except for true Wildwood. So my guessing is based on that, as there were plenty of trees, who would burst maggots Now, 'death magic' - or Dhar - is interconnected with daemons. So the whole wave of death magic might've had a similar effect, like rain and warmth does to a regular planted seed But these are just my guessings. Gotta nab that book of Nagash for myself.

Anyways, Athel Loren is quite large and there are many kins, who rarely meet each other. So if one starts to do some weird stuff, others might not even know about it, until it's too late.

What size of base is Nagash on? Is it the humongous 100x150 or the 75x50 ? I thought it oiled be cool to make nagash from a treeman bits or mix he kits,as they look similar in size.

A-rock base. He's the in the size range of a wraithknight.