Gundark said:
Okay. You've almost answered your own question. If the race you're going to create is just 'this world's elves' then there's no point in doing it. If you're going down a vaguely LotR route, you might as well not bother creating new races and think instead of trying to find ways of making your version of the existing races and their cultures distinctive.
I think a problem with new races is how to make them accessible and different at the same time. Elves, hobbits, gnomes and dwarves are all ideas of beings that most of us have a good idea about. More importantly, they are more like humans than unlike them. This makes it possible to pretend to be one. One of the reasons why, in this age of seamless CGI, most SF film aliens are still bipeds is because audiences would have a much harder time identifying with a genius starfish. Creating a new race is a challenge. I've got a couple of suggestions.
If you are the kind of DM who starts designing his campaign world in broad strokes first, you may find it relatively easy to conceive of races that occupy particular ecological and cultural niches. If two or more such races share a symbiotic existence, there's another angle you can exploit. If you can create three or four races and replace elves, gnomes or whatever else entirely, then you're players will be less likely to make a metagame determination that race x is a replacement for race y. This might make your creations more intriguing and consequently more appealing.
One possibility you might consider is making the new race NPC only to begin with. The easiest way of doing this, without having players turn around and complain about not being given the choice to play one of these beings, is to introduce them after the campaign has begun. Maybe the world is young and only recent explorations into the wilderness by the PCs or other parties have brought the known races into contact with the new race. Maybe an ancient magical barrier that kept the hemispheres of the world apart for millennia has recently diminished, enabling explorers from both hemispheres to venture into effectively new worlds. However you manage it, this approach will allow your players to see the race(s) in action and in context and when, heaven forbid, a PC bites the dust, that player may be very interested to hear you say, "Do you want to play an X?" An advantage of this approach is that it allows you, while controlling such NPCs, to iron out wrinkles in the race design before you grant the players access to them.
You know your players, I presume, so you'll know how accomodating they will be of fundamentally unfamiliar thngs as new races. Even so, your players are only human and they're going to lean towards playing human-like beings.
Good luck. And if you do create a new race, please post it on EN World!