I disagree. I have no problem with a custom lineage Elf being an Elf for all game purposes (Feats, magic item attinement, being a V1.0 Bladesinger etc).
I mean, they're an Elf in the game world. The game world reality is that they're an Elf. There is no need for any demarcation (and i honestly think XGTE racial feats are about to get erratad anyway).
Also, it breaks nothing. Most of the push back is from the same people that decried the new race rules as PC rubbish (or likely hold some pretty outdated views on human races in refusing to accept they're social constructs - which this new custom lineage variant clearly accepts as its premise) in any event
Its interesting. I currently play a male half Elf (Drow). My mother is a Drow and my father is a Tehyrian human with a Sun elf grandparent.
Making me Drow, Sun Elf and Human. He rejects being called a 'half' elf (or 'half' drow) seeing those terms as racist.
I created him as (mechanically) a Half Elf (Drow), but I'd probably redo him as a Custom lineage if I had the chance.