Not fond of the morph ear-rings being a faction-only item...
Elf-only equipment that has been complained about on all sides of the fence, but holding it up as a big "You must join factions to have this" goes far beyond enhanced artifacts.
The enhanced artifacts will probably be unbalancing in PvP. But, although it would require some changes to playstyle, PvPers can pretty easily join factions.
Yes, the artifacts will also give an advantage in PvM, but there is not a direct competition between players.
Allowing human characters to equip elf-only items affects all playstyle, in possible templates and equipment. Limiting that to only a portion of the various playstyles available doesn't sit well.
Also, allowing it as a faction reward, somewhat limits the ability to add such a thing as a non-faction reward/feature at a later date.
Why not add a rare drop non-faction version (across overland spawn, say), and make the faction version have a small additional bonus (night sight, or something, since it's "morphing you into an elf" or whatnot).