I believe elven 'magic' was based on profound knowledge of lore and natural laws. And this probably included the ability to influence living beings. I don't think Luthien really
turned herself and Beren into something different from what they were. To my mind it could be sone sort of a hypnosis, when the enemies just saw what Luthien wanted them to see, something (or someones) they expected to see in their stronghold.
