Edited quote to remove lots of line breaks....
Reading your perfectly reasonable plot thread in a campaign, here is how I, as the GM, would approach that.
ME: OK guys, i'm running a different story here so you can be whatever race you want EXCEPT elves.
Jim: Oh man, I really wanted to try the Dung Elf from the new book that just came out, it has a cool new Fecal Point(tm) system that looked fun.
ME: Well there aren't elves, so maybe you could make a half-elf?
Jim: Thats odd that I can be a half-elf when there aren't any elves...
ME: I know, right?
Jim: Well, let me see what else I can be, then.
ME: (after thinking about it for a while and realizing that a good way to distribute my breadcrumbs about the super secret elf story is to do it through an elf) Hey, Jim. I reconsidered. You CAN play a Dung Elf, but you have to know that you will literally be the only Dung Elf in the entire world and everyone is just going to think you are a Half-Dung-Elf. Also I know its a tired old trope, but you are going to start only remembering the past year or so that you spent adventuring with the rest of the party. You literally cannot remember where you came from, but you can explore that as the game goes on.
Jim: Awesome...mystery man Dung Elf Barbarian.