Re-do the elves. Cuz they don't make any sense.
Now alright, I'm pretty sure that DF's elves are more reminiscent to nymphs than the pointy eared bastards we love to hate. Lovin' nature and hatin' anyone else, alright?
So first off, they claim to be pissed off by the fact that people "butcher" trees, but they have no problems with killing their own kind on purpose or killing off anyone else. And of course, they use born artifacts most of the time, but they think that butchering animals in wrong, so they just wait around for an animal to die and take its bones. That's fucked up on so many levels.
Second, they use bows. Made of wood and bones. And I thought these pansies hated wood artefacts, but here they are, shooting wooden arrows at my dwarves with their wooden bows. And where do they live, uh? WHERE DO THEY LIVE? In trees. Carved, of course. What the hell is wrong with them?
So I'd say, to satisfy everyone, let's just make elves similar to LOTR's elves. They are a-okay with cutting down trees, but they'll be most likely to allow nature in their fortress, with vines scourging on their walls and trees growing everywhere. Also being closer to animals and eat exclusively vegetables. They would also be closer to magic, I suppose. What could be interesting is having some differences between certain groups of elves, one being higher/closer to magic than the others for example.
And they could complain about... Huh... Dwarves hunting too much? I dunno.
Frankly, having race differences within the races could be interesting, but that would trigger some purists around. I dunno, I'd love to see Gnomes and Hobbits being the distant cousins of dwarves. Or High Elves treating their subbordinates (Drows? Gelflings maybe?) like shit. I've already been thinking of doing a mod that creates a human generator so that each human tribe/civilization has its own physical gimmick to it (like having humans that have blonde hair that glow in the dark, natural vampires, snake-tongue humans, winged humans, etc.).