It's powers have already been consumed by Illidan though.

I think the name should be "The Consumed Skull of Gul'dan" in that case.

Why is this not legendary? I mean it has huuuuuuge backstory to it. It's been in Warcraft lore since forever. Illidan's swords are legendary and they barely have a story behind them.

Yes, this really should be a legendary item.

And why even put it in the game? Illidan destroyed it and released it's power. So it's gone. And yet he is not only seen with it, he drops it too?

May I simply say: PSHAW!!!

It's a skull that the orc warlock guldan used for his warlock stuff. It turned felwood into felwood, corrupted the furbolgs and was used by illidan to gain power and knowledge especially of the location of the tomb of sargeras. Yeah I was bored one day :P

poor gul'dan. I bet he had no idea what people would be doing with his head after he dead.

In the quest The Red Crystal, you discover what looks as if it's part of a humanoid jawbone, encased in a red crystal, which has fallen down the mountainside from Felwood.  This could be part of the Skull of Gul'dan.  I was under the impression that after Illidan consumed the Skull's power he cast it aside.  I would guess that the appearance of the Skull (or a skull, anyway) in the Burning Crusade material wasn't created by the same people who created the Darkshore quest text, or that it was simply forgotten in the same way that the original story about how the Eredar corrupted Sargeras was forgotten.  Continuity gets sacrificed in the desire to make something new and cool.  I guess we're lucky that it happens as rarely as it does in WoW.

I would seriously doubt that there will be any further WarCraft strategy games until after WoW's last expansion has been released, whenever that will be.  Yes, perhaps the heroes of the Alliance and Horde will invade Northrend and destroy Arthas, and perhaps other fearful enemies will be defeated in future expansions as well, but there are plenty of loose ends that could be explored.  Hakkar the Soulflayer escaped from the Titans' prison; what else might escape?  Is Sargeras really dead?  Kil'Jaeden still leads the Burning Legion, and there is no content in which he is defeated (or even directly encountered) so far.  Harbinger Skyriss in the Arcatraz claims to be from an empire more numerous and destructive than the Burning Legion.  The world from which the Worgen came is not well known.  And those are just the things I can think of right now, based on loose ends -- since they made up everything that's currently in the WarCraftVerse, Blizzard can make up more things.

While many major characters are dying, there are still many left to face, including:

Agamaggan (Possibly)
Al'Akir the Windlord
Anub'Akan
Arthas
Azshara
Black Riders (from Deadwind Pass)
Deathwing
Hakkar the Houndmaster (Possible CoT boss)
Jin'zakk
Kael'thas
Kel'Thuzad (Still not dead yet)
Kil'Jaeden (the likeliness that we'll actually kill him when he's half-summoned in Sunwell Plateau is really low...)
Malygos
Mannoroth (Possible CoT Boss)
Murlocs
Neptulon the Tidehunter
Old Gods (Three Remain, and C'Thun might not be dead)
Rokhan
Sargeras (of Course)
Therazane the Stonemother
Ula'tek (A Loa Similar to Hakkar the Soulflayer)
Whoever the Leader of the Makrura is

Ok, that's a few. We will probably find out that Illidan isn't dead as well or soemthing.