[Black Leviathan]

Realistically if Elves and Dwarves are just different ethnicities of human they wouldn't "breed true" If residents of Dwarflandia and Elvistan shared a forbidden love they would have an offspring that was the medium of their genetic traits rather than purely one or somehow a mix of any other ethnicity. They could look very much like a dwarf but perhaps they'd be more gaunt with soft golden hair and an aptitude for magic.