I can see the halfling thing being an interesting origin story for a villain. Heroic halflings need some sort of evil individial or force to fight against to work as a solid narrative- so if the culture got a little bit too risky with using a specific fictional individual as that enemy, they could become real

I love this concept… it takes the humanity out of alien/foreign/different races. If done properly, you can easily conceptualise different views of the world. Something like the sort of thing John Scalzi has done with his works - let’s work through how a different viewpoint actually works and then work out where the jagged edges are - all of a sudden, the different races are fighting with each other because they see the world diferently and don’t communicate properly so they assume all of the others think the same way (because they can’t concieve of anythign else without looking that far into it) and boom you’ve got a realistic world with in-built fracture lines…

Quite similar to how beholders reproduce.

They have a nap, dream about a beholder (besides themselves*) and poof, one is born.

*I’m not sure if this is the case.

When the Dwarves and Humans first interacted they both described it as “we just smash”, and much sitcom hilarity came out of a simple misunderstanding that nobody bothered to clarify.

So then Half-Elves could be a human mammal in the process of an Elven education, and particularly adventurous humans may risk waking up as a halfling one day…