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You'd use the elf if you want to play an elf character, a lycanthrope is a template, it modifies the character and gives it a level adjustment, gives it the shape shifter sub type, but doesn't affect the race.
if a lycan or even a half dragon for that matter, were to breed with another of the base creatures race (elf) would the lycan be 1/2 lycan? and the post i posted b4, if you have to use the half elf instead of the full elf, would it be 3/4 elf 1/4 dragon? and if none of this applies would you jus do a punnet square to determine (or the roll of a d100 %) the chance of the offspring to become either elf or lycan/half-dragon? thanx for your time