Well, this is from the Dragonshards article Half-elves of Khorvaire (in the Eberron Campaign Setting), off the WotC website:
Sounds like a good enough system to me.Half-Elven Blood
The genetics of the Khoravar (half-elves) are unusual. Many alchemists and sages are amazed that it is possible for humans and elves to interbreed at all. When a human and half-elf conceive, the resulting child has an equal chance to have the race of either parent. In all other cases - human and elf, half-elf and half-elf, and elf and half-elf - the result is always the same: a half-elf child. The Aereni (elves) claim that this is not a matter of physiology or genetics, but of magic; the blood of the elves holds the light of ancient Xen'drik, and once diluted it can never be regained. Whether this is true is a matter for each DM to decide.