I suggested to the player running an elf ranger in my AoW game that he look at the elven ranger racial substitution levels (from races of the wild) and take "undead" as a favored enemy.
The racial substitution bumps up the favored enemy damage to +3 per application instead of +2. Eventually it will add up a lot, IMO.
My favorite abuse of Favored Enemy feats is the Chameleon's floating bonus feat. You just need one level of Ranger (or anything else that grants Favored Enemy), a few feats that do fun things against your Favored Enemies, and then the Chameleon grants you the ability to choose a new Favored Enemy every day.