In World of Warcraft my frame rate is great when I'm doing nothing but when I am in Dalaran or a Raid it drops down to the lower teens and sometimes into the single digits. I've lowered everything in game to the lowest possible settings, set the color to 16, decreased the resolution, used AMD's optimizer tool, and OC my graphics card. Here is my setup:
I agree with some people here, your processor is bottlenecking. It does not have to be 100% at all time, because not all parts of the processor are used when its "processing".
Definitely recommend a faster proc, as your video card and ram should be more than enough.
And just in case, try playing with a different connection, just to see what happens (like at a friend's house or something)
Have you tried lowering shadows, texture detail and ground clutter (can't remember what its called). Theyre very intensive. With a similar set up only using a 22"and an HD5870 512mb. I was sitting around 60fps most of the time with full settings.