The Atlantasia quote below seems to be causing a stir:
On Atlantasia you will NEVER find a half-breed elf (if a female elf was ever raped by another race she would commit suicide). (uh, so what would happen if a male elf had relations with a female human?)
I can't say I would ever use this in my games, or even that it makes sense, but if that is the way he wants to run his table, leave him be.
I was never a fan of half-elves personally because I find once you start allowing cross-breeds you end up with that character who is half human half dragon half elf who was raised by ninja pirates and taught to fight by a rengade drow swordmaster and so on. I usually solved the problem by simpley having humans and elves (all demi-humans) unable to produce offspring. They are different species after all.
In general I also try to play up the fairie elements of 'Elves' and fairies, from what I've read, tend towards the sexually capricious. Even Tinkerbell has attended at least one orgy (seriously, read Peter Pan carefully). I'll leave you to look that up yourselves because there is no way I am typing that into Google.