Rohan noticed something that I missed in the Blizzcon coverage - Blizzard disclosed in a roundabout way that they sold 220,000 of the $10 Pandaren cosmetic pet during the first two months. (Half the proceeds were donated to charity during that window, and Blizzard mentioned the total size of the donation.)
That number sounds low compared to the total WoW playerbase, but it also sounds impressively high for a purely cosmetic item (especially when there are well over 100 alternatives available in-game at no additional charge). How many might Blizzard have sold if their own in-game rewards weren't competing with their premium store? How many units would sell if an item actually had an in-game effect? As Rohan's commenters point out, there's a well-established precedent for large portions of the playerbase paying $40 for additional content in expansion packs.
The one real caveat is that the value of this kind of cosmetic purchase scales with the amount of time players invest in the game. I paid for the collector's edition of TBC nearly four years ago, and I've logged probably hundreds of hours since that time with my trusty Netherwhelp in tow. Players will be more reluctant to make that kind of purchase for a new game when they don't even know if they plan to stick around beyond the free month.
As Rohan says, it would be extremely challenging to pay for a game on the scale of a traditional AAA MMO solely through cosmetic microtransactions. I don't know of any game of that size that has actually attempted this. The flipside of the argument is that this kind of microtransaction is a virtual no brainer for game developers. Even if the market for minipets and other cosmetics caps out at 5%, that's almost certainly more than the portion of the market that will quit the game because it happens to offer cosmetic items. If anything, it's remarkable that there are any games left out there that have NOT yet added a cosmetic item shop on top of whatever the rest of their business model (subscription, one-time unlock, mandatory consumable purchases) happens to be.