So what happens to murdered elves?

[Earendilyon]

Originally Posted by JennyHallu

It was my understanding that when an Elf who dies physically by means of grief or violence his soul passes to the Halls of Mandos, where he may remain as long as he likes before being either reborn as a child or simply being given a new body and returning to Arda.

The 'reincarnation in their children' was an early idea of Tolkien (found in, if memory serves, The Books of Lost Tales), but which was later dropped in favour of the latter 'scheme' mentionned by JennyH: after some time residing in Mandos and pondering about their past lives, they were reincarnated in their newly built bodies to live in Valinor. Only a few exceptions are known, e.g. Miriel and Fëanor. As far as I know, only one Elf ever returned to Middle-earth after dying and reincarnation in Valinor: Glorfindel.