We had the same problem, I'm sure it is not possible to change a character from one faction to another.
In my opinion, the best aproach is to kill the first one and to spawn a different character with the same name in the other faction. But you can not choose the portrait of the 2nd one...

Btw, the only reason for wlesmana to use a sub_faction for some characters is so other factions do not use these same names (like Gandalf, Aragorn...)