Priest, I'd like to introduce you to an acquaintance of mine, one Silverthrone over the
Wizards.com boards, you'll have much in common. Notably the tendancy to make elves "moer flavorful" by giving them tons of overpowered stuff and consider it a personal offense whenever there's a critic against all this unbalanced elfiness.
Now, it's your campaign, so I won't make any comment myself.
I'll just give my own rules on elves IMC.
Elf-specific arcane magic: no. I do plan on getting several race-specific magic, so that each major humanoid race (playable or not) will have its own special quirks and knacks for magic, but I'm still undecided on what the elves will get. (But otherwise, dwarves get rune-magic, gnomes get gem-magic, halfling get tatoo-magic, kobolds get metamagic, humans get elementalism, and I'm still undecided about what's best for elves, orcs and goblins.) Each race will get a magic-using PrC.
Elf-specific weapon: no. I've enough weapons already, no need to invent or grab new.
Elf-specific armor: no. IMC, the master smith race is the dwarven one. I can't picture elves mining ore, rafining metal, and working on the forge. And elves IMC can't picture themselves doing all that: "A mine ? What an ugly place, you don't even feel the gentle light of the stars ! It's dark and damp and nothing nice live here !" (to what the dwarf ruply "bah, wussy elf"), "So, this is what a forge looks like ? This awful fiery workshop ? The heat is unbearable, I feel like I were under the unforgiving sun of the Fire Desert, I can sense my body wilting there. And the noise ! The noise ! I'll be deaf for the rest of my life if I stay there one second more !" (to what the dwarf ruply "bah, wussy elf").
Elven craft is rather with wood, leather, ropes, clothes... Even if they can very well use magic (energy resistance to fire, darkvision, endurance, etc.) to stand the hardships of mining and smithing, this is not enough to overcome their cultural bias.
Elf-specific magical items: nothing news, I felt that boots and cloacks of elvenkind were enough.
Elven subraces: I use three elven subraces. Rule-wise, they are like the grey, high, and wood elves of the MM, and they go by the same names.
Wood elves are usually CN. They are barbaric and fierce, and the traveler can't know in advance if he'll be greeted warmly and invited to join their festivity, or stalked and hunted by (dire) wolfriders, as they are as likely to act in either way, depending on their mood, and on the season (more gentle in spring and summer, more agressive in autumn and winter). When in their good mood, they usually enjoy playing harmless tricks on their "guests". Their society is strongly individualistic, with no clear leaders, small tribe units, and a very loose concept of family (they know who's their mothers, and usually have an idea of who's their father also, children are nursed and raised by the whole tribe, wedding don't exist). Of all elves, they are the only race that can somewhat rightfully boast kinship with the fey -- especially given that several of them have at least one nymph or satyr in their ancestry.
If wood elves are barbaric, grey elves are civilized. Usually chaotic good, their society is also devoid of clear leader figure, but they have a Council of Wise Elders they listen to, and a "King" or "Queen" who's role is to be a spokeperson for diplomatic relationship with other countries. They have a concept of "cooperative altruistic anarchy" that most other races have trouble to grasp, and that could probably not be exported successfully to cultures that are not so strongly chaotic and good. They are passionate sailors, and the ships they build are probably the best, fastest, and most beautiful known on the Lone Continent, although they are not really handy for trading.
No that we have covered the barbaric and the civilized elves, the last subrace is that of the decadent. The self-proclaimed "High elves", although surface-dwellers, are this world's equivalent of dark elves in other worlds. They are evil, nasty, perverse; and everything that is unsufferable in the typical elf, like vanity, arrogance, racism, is exacerbated in them. They have a vast, if crumbling, empire that has enslaved humans and halflings, and tales of their awful customs are not exagerated. Only a slight minority of them, considered "heretic" and only barely tolerated, is still faithful to the chaotic good gods and goddess of the Seldarine.
