Your post reminds me of something another fan wrote the first time she read The Silmarilion. The Elves described in that book are more real, with their own bad deeds and jealousies to
deal with. For instance Feanor and his sons. For the most part good, but so blinded by what they want that they stoop to do really nasty things, including attempted kidnapping and murder.
As for them being isolationist. I always point out that Tolkien wrote from the perspective of the middle ages. In those days the average man did not leave his village his entire life except if his master called him to war.