Welp, elves supposedly fade away if they remain in middle elves with no trace of the eldar's bliss. What this means will forever be ambigous as this is hardly addressed in canon materials. Still even if the fading is literal it's not really death for elves and the sort of rot we are seeing spread makes no sense whatsoever.The mithril legend does not make sense since Numenor has it as well, unless that same elf and balrog fought once again lol.
The supposed Silmaril tree story is nonsense as well since all three have very specific places where they ended up and where they have been through history.
I hope all this legend and mithril need and elven soul deal is either just bs legends or Sauron's play baiting the elves with power and whispering into Celebrimbor's and Gil's ear. Since they condensed so much from the Second Age, Sauron slowly deceiving everyone should already be underway and the plan for the Rings of Power should be in motion which is why they needed the forge. As for the need for mithril, its what the rings are made off, well at least Galadriel's ring is.
The story about preserving the souls and stopping their being and lands from Middle-Earth's decay is more or less what the elven Rings of Power did (minus the soul thing, thats "kinda" (emphasis on kinda) a third age thing with Sauron's darkness more and more growing and their hold on Middle Earth getting weaker).
I read a theory online which I think fits with canon material... All sauron candidates are red herrings and sauron is likely already working with celebrimbor. That puts the stranger in a weird place though. It'd be too shitty a development if he is gandalf.
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One thing I will say about this series is that casting is generally spot on. It feels like they went for a slightly younger look for the elves than in the PJ films which I think is a better fit since elves remain in their physical prime for eternity.