Unfortunately, the second theory was never confirmed yet, either. The studies of the underground world showed that although it was impossible to tell when the Blood Elves appeared there, their traces could be found throughout the history in the relics, but there was no sign of elves in the earliest relics. Their earliest traces were left in the same period as the middle phase of the Nesser Dynasty in Noscent.
Lin Yun didn't know how the Blood Elves emerged, either, but like all the other elves, they were all favored by fate as natural-born spellcasters. Some of them were just more talented than others.
If the Blood Elves' reproduction weren't as difficult as that of all the other elves, and each new child might take years if not decades to conceive, the Blood Elves would dominate the underground world.