Reason for the burning

I feel like something that keeps being overlooked is the psychological aspect of the burning.

When we (horde) invaded darkshore, one of the things Sylvanas told us was, if given the chance, to kill Malfurion. As the leader of the Nelfs, his death would be a huge blow to the morale of the alliance. Now I haven't played the quest today, but I doubt we killed him.

Fast forward a bit to the occupation of Teldrassil. Sylvanas and her entourage arrive at the base of the tree, and are noticed by a wounded Nelf. The nelf calls out to Sylvanas, who approaches her. Now at this point, Sylvanas thinks she has won. After talking with the Nelf, however, she realizes that she hasn't broken the spirit of the Night elfs, what with the person dieing telling her she won't win. With Malfurion out of her reach, she realizes the only way to completely devastate those left is to burn the tree. This is psychological warfare. Burning the sacred home of your enemies would completely shock and devastate them. It might even make many of them become so overwrought with grief that they cant functuon.

In short, I dont think the tree burning was plan A, but was decided once plan A, ie kill Malfurion, became infeasible.