It's alright, it works decently, though without reading the text I didn't get that some of the elves were bad and some were good and I just thought the bad elves were functionally immortal.
I feel like some sort of particle effects on the elves would be good when you hit them, perhaps hearts when you give a good elf a present, and frowny faces when you give a bad elf coal, and if you can do it have them run off rather then disappear, since disappearing in a narrative sense doesn't work very well, though I know it does for the simple game mechanics.