A: Anything is possible. Elves have always been associated with Gaelic language for so long that multiple generations have strong associations of Gaelic with all things Elvin. I think that it does not catch the same flack because of the strong association of language with the beings. Their long standing Gaelic name has been written in the original form in many published books for over 150 years. Tradition has carried over into most modern fantasy and mythology books which probably plays a major role in the second language acceptance for such stories.
I've never had any problem reading sci fi stories that contain *alien (always made up languages*), Gaelic, African, or any other language in dialog. Authors often used foreign words through the late 80's. Additions of such languages was the main gimmick to remind readers that the beings were speaking in their native tongues and nobody cried foul. Even if readers had no idea what the word meant before checking the book's back glossary, it was very much normal to check for glossaries when buying books for our fun reading. When the PC police began throwing fits in earnest during the late80's and got super active in the 90's, the number of books with multiple languages present evaporated overnight.
The anger with Japanese word editions might be a sign of PC conditioning to become super sensitive. So many issues have gotten the super hard push to be politically correct that everything said or done has the dangerous potential to make people uncomfortable. Innocently intended additions of another language within dialog may actually fit that category, and so people are getting offended due to the belief that only creatures with centuries of tradition may have more than one tongue to speak.
In the ancient past, (1940-ish to 1988) everyone understood such language additions were the highest form of compliment. Now . . . everything is viewed as a cause for offense as often as not. So, I think it very possible that the political correctness crammed down our throats from birth to death since the late 80's could have quite a bit to do with the new aversion. The fear of offending has done much to stifle many forms of art over the last 2 decades.