One of the issues here is the conflict between archetypes. . .
So elves were great stalkers and bad hiders. . . leading to "My elf just keeps moving around in the shadows so I can use stalk instead of hide."
I find this to be one of those "If you eliminate the flaw, it's not a flaw."
PC whines about their elf not being able to hide, in conflict with the archetype of sneaky elves, and a rule spawns to "fix" that. . . .
I'd say that what that player really needs is a variant elf type that has no SD penalty, or to buy more ranks in stalk/hide to get over the penalty.
It's imposing an "Outside the game" archetype of "Elves hide well" over an "Inside the game" mechanic of elves having SD penalties.
Of the whole package of racial skill bonuses applied here and there to the races, the only two I ever liked as applying directly to the in game archetype of the race without making an effort to fudge anything were:
Elves +25 meditation (since they naturally meditate in place of sleep.)
Dwarves -50 swimming (since they are denser than humans, and have a poor physiology shape for swimming.)
All the others strike me as cultural factors, or attempts to impose outside archetypes onto the game mechanics in order to avoid a penalty (or get a bonus) for free.
Like, why would an urban upper class elf who'd never been in the woods or a sneak thief get a +25 to hiding?
Jus' my $.02