I was experimenting with some elves and orcs and seeing how the swords reacted to orcs, trolls, and wargs (with similar results) and realized that it didnt react with me. I set my alignment to negative with elves and positive with orcs, and found that there was no reaction. My idea is that if you have negative alignment with an elf(Around -50), their sword/dagger will glow. This would effect players, elves, and anything that holds elven equipment that glows.
My other part of the idea makes a little more sense mod-wise, and to make it a bit more in-depth. If you have -50 alignment with High elves, but no other elves, then only High Elven gear will glow instead of all elf gear glowing. The same applies with all other elves. The only problem here is Gondolin, since they do not have an alignment bar.