There would need to be more than incentive for this to work.
Say a republic smuggler wants to defect to the empire and be an agent. There are many things to consider with this and since this is a story driven game you cant just stop in the middle of the smuggler's story and pick right up with the agent story with no transition at all. Unless the idea is implemented at max level once the character's main story is done I just don't see a cost effective way for there to be faction switches.
What I would do to help faction balance would be to give the underdog faction a bonus. Say, depending on how big the faction imbalance could increase xp gains, warzone and mercenary marks given and green quality and above gear drop rates.
Would certainly give some incentive to playing the other faction without imbalancing things.