You know, you could have stopped at I'm an elf. [He's seen the Lord of the Rings, gosh!]

Why do you think it would have been rude? Imitation is the highest form of flattery. A lot of people cosplay because they are inspired by what they've seen or read, and it holds a special place in their hearts. I could understand if they were being rude purposely while cosplaying, but usually they aren't.