While it would be great for someone to figure out how to manipulate tree growth through dfhack and produce items directly from trees, it turns out that it's not as easy as it might seem. I won't get into the technical details, but in a nutshell LUA scripts can't read or write the material of a particular tile, tree or otherwise (shape yes, material no). So unless someone who knows how to code in one of the other languages dfhack uses gets in on writing a tree-shaping code, we'll probably be stuck using the tools DF has available by default.
I think the best way for elves to create items is to grow them directly from seeds. Basically, each elven-created item would actually be an individual, living tree, shaped into a particular form. And, kept alive by magic, I guess? Or maybe not. As far as we know, elves have no problem with letting grown items be destroyed. If they did, they'd never sell them to dwarves...
It is worth noting that plant growths can be pretty much anything. I actually modded a money tree that grows gold coins. So, it should be possible to produce a seed that grows a plant that, when harvested, can be processed into a particular kind of item. However, adventurers will always be able to pick an infinite amount of any item growing on a plant, so it's best not to make natural plants that grow anything too valuable.