I agree, Lunakat-- and Nowth. The elves do encapsulate certain types or characteristics of human beings, while somehow still being fully realized characters in their own right. And yet, in some way that's hard to describe, the human characteristics of these elves seem to be distilled or purified-- they have, in general, only one flaw or set of (related) flaws. They are not a mass of conflicting virtues and vices, as we are. While still seeming to be complete and three-dimensional characters, they are simpler beings than humans. Perhaps this is the nature of fantasy; perhaps it is the nature of fictional characters in general. But I think that because they are elves, we can actually see ourselves more clearly in them than if they were human beings, with all of our complex motivations and self-contradictions.
Am I making any sense?