I've had half-orcs, Half-elfs, half-dragons, half-fiends, half-ogres, half-giants, and just about every other type of creature you can imagine.
It's basically no different than any other game you run. You just have to make sure nobody builds something that erases another character's build (for example, if guy A is playing a rogue, and guy B is playing an Alchemist, the alchemist character shouldn't be taking every tricky lockpicking feat and boost he can to outdo the rogue at being a rogue).
The race itself is really not all that much of a factor beyond about level 5, unless it's a CR4 or higher race. Just keep it to CR 3 or less and you shouldn't have any problems.
I have used a template character twice in 3.0. The first was a half celestial druid brought into a high level campaign. This character totally dominated the campaign even though he was 3 levels lower than anyone else in the party. The biggest advantage he had was all the extra defenses he had especially spell resistance. The other thing was having all the extra spell like abilities even if they could only be used limited numbers of times per day.
The second was a half dragon paladin who started at first level where everyone else was starting at 3rd. for the first couple of levels he was a little on the frail side due to lack of HP, but soon began to pull ahead. Overall he was not as overpowered as the half celestial but still was a lot more powerful than anyone in the party except his brother.
Keep in mind that not all templates are equal, but all of them will significantly raise the power level of the party. If you are not careful you will end up with significant party imbalance. What I would do is to use the race building rules from the ARG instead of using the standard templates. Figure out what point buy you want to use and let everyone build their own race from that. They can still be half dragon or whatever else they want to be, but everything will be in balance.
As long as you adjust the power level of the opposition then the campaign should be fine. You probably don't want to make all the opponents using the same rules as the players or they lose the feeling of being unique.
The first couple of levels are going to be the most challenging because it will be difficult to find opponents that will challenge the party without a high chance of TPK. It sounds like a fun campaign so good luck.
I have used a template character twice in 3.0. The first was a half celestial druid brought into a high level campaign. This character totally dominated the campaign even though he was 3 levels lower than anyone else in the party. The biggest advantage he had was all the extra defenses he had especially spell resistance. The other thing was having all the extra spell like abilities even if they could only be used limited numbers of times per day.
The second was a half dragon paladin who started at first level where everyone else was starting at 3rd. for the first couple of levels he was a little on the frail side due to lack of HP, but soon began to pull ahead. Overall he was not as overpowered as the half celestial but still was a lot more powerful than anyone in the party except his brother.
Keep in mind that not all templates are equal, but all of them will significantly raise the power level of the party. If you are not careful you will end up with significant party imbalance. What I would do is to use the race building rules from the ARG instead of using the standard templates. Figure out what point buy you want to use and let everyone build their own race from that. They can still be half dragon or whatever else they want to be, but everything will be in balance.
As long as you adjust the power level of the opposition then the campaign should be fine. You probably don't want to make all the opponents using the same rules as the players or they lose the feeling of being unique.
The first couple of levels are going to be the most challenging because it will be difficult to find opponents that will challenge the party without a high chance of TPK. It sounds like a fun campaign so good luck.
the race building rules in the ARG aren't even balanced at all. a climb speed is cheaper and better than +2 to climb, a natural armor bonus is cheaper than a skill bonus, and +2 to will saves costs 1/4 the price of skilled. despite the will saves having more combat influencing factors.
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The first couple of levels are going to be the most challenging because it will be difficult to find opponents that will challenge the party without a high chance of TPK.
This is a very good point. You'll have trouble safely challenging a party with extremely good stats and powerful abilities, but only 1-2 HD. This might work better if you start around level 5.
You could try building custom high-powered races with mythic feel. As Shuriken Nekogami says the ARG rules do have some balance problems, but if players are building their own races they'll probably avoid the obviously suboptimal choices (like +2 climb or swim instead of the relevant speeds) and end up with roughly balanced characters relative to each other.
Balance in the party will probably also depend a lot on how dedicated your PCs are to optimizing characters. Adding templates or custom races gives skilled optimizers more to work with. This'll probably translate to a bigger advantage for them compared to more casual players.
I'm currently playing in a campaign with a half-celestial and a half-dragon along with some normal humans and a dwarf. Because of the LAs on the two templated races, it's actually pretty balanced. But if you are making a whole game based on templates, just stick to the recommended LAs and you should be pretty much okay imo.
Just remember that while your players might have exp. for lvl 3 or 4, they still have the abilities of a 1st lvl character. t takes a bit more work for the DM to balance encounters and challenges for such a party.
Its going to make your game much harder to balance...the appropriate CR's vary a lot when you start throwing powerful racial abilities into the fray. It can be done but it will be more work for you. Also it can raise a lot of role playing issues, most people don't trust your half dragon.