If I understand correctly, ChowGuy's attacks on this perspective in two ways: (1) While the Humans live in the Valley, they are not planning actual extermination of those elves living outside of the valley, and (2) Joseph is a cowardly, incompetant king hiding in his fortress under the Elven Court ruins and in no way the leader of humans across the Blessed Continent.
The reasons for my opinion about human policy toward elves can be summed up more or less as follows:
(1) The elves have been slaughtered across the continent, not allowed to flee (as in the Tollrock woods). This was before Elwyn settled in Aldor, but it does not mean that the humans, at least then, only wanted the elves out of their valley.
(2) The first few scenarios of the campaigns seem to imply a sense of desperation, both on the part of the Keepers and on the Cult. This sense of desperation continues throught the game (or, at least, Elric whines about it; Talic seems overconfident as they come). They NEED the halflings/goblins, and if they don't get them to join them, the elves (whichever kind you are) are sunk. This tells me that there are not very many of the Keepers (or the Cult) left.
(3) There is no Allied Victory option for Elric/Julia in the Valley of Wonders, showing that Joseph has no intention of compromise. The elves can't even ally with the High Men and keep it (the High Men are another issue, of course).
My opinions about Joseph's capacity to rule with far-reaching effects are for the following reasons:
(1) In the timeline in the back of the manual, it strikes me that most of the races (except the elves if Silvanus versus the Keepers) are behaving as a quasi-unified entity, and that the human king of the Valley of Wonders appears to be calling the shots outside the valley. This continues throught the timeline.
(2) Joseph is without doubt the most powerful of the factions in the Valley of Wonders. He starts out with several power nodes, five 4-hex towns, and an external income of 100 gold per turn. Everybody else has to settle for three 4-hex towns, and nobody gets the external income. This tells me that Joseph is exceptionally powerful and wealthy, probably directing forces outside of the Valley.
(3) Together with Inioch, Joseph is the only character with the Emperor AI in the game - even Meandor and Julia only get King. The improved AI quality tells me that Joseph is an incredible genius at military planning. The only reason why Julia and Meandor have a chance against him is because they, while not as good generals, are better at finding other resources, especially magical ones, and are probably more capable tactically (something that the elves, at least classicly, are excellent at).
(4) Triumph studios claims that the best way to win the Valley of Wonders scenario is probably to wipe out the other factions, then go after the humans last (Personally, I find that less satisfying, but still probably easier). This means that it is easier for Meandor, for example, to kill Julia and migrate her cities before going after Joseph! It's even reccomended that he take out Inioch too, before taking on the humans!
(5) Joseph has the highest level of anybody in the game, second to Inioch.
So, any comments? Suggestions? ChowGuy? Anybody else who wants to suggest something?