If they were different species, the viability for mixed children would be much lower, but we do know there are some mixes out there as confirmed by the lore team. So yes, the 5 player races are indeed races (although due to the vast anatomical differences, I'd call them breeds) are of the same species.

As far as interracial relationships go, there does seem to be a large cultural taboo for it, even more than same-sex relationships. My guess stems from the fact that the races each value vastly different lifestyles and climates, which probably puts them at odds with other races, or even clans within their own race.