ForgottenSaves first off that was an awesome read, and struck true on several notes. I think on some level we also cheapened races to make them easier to digest.
The fey in mythology are terrifying. Even in Lord of the rings they are ancient and basically immortal. I think a huge part of what races should be doing is asking a question in both science fiction and fantasy.
Tolkien had elves that were not really part of the world any longer. They were basically immortal and could hop a ship to heaven whenever they wanted. They also knew their greatest works were behind them. That is an interesting contrast to the short lives of men and the love of breakfasts the hobbits have.
I think if races/species/ancestories just exist in your world but they don't do much besides give you a stat bump and dark vision you are really missing out, and should probably simplify to everyone being human, or something.
One of my other other favorite d&d world's was the one AEG whipped up around warlords of the Accordlands. Orcs and goblinoids are one race, and are experts in seige weaponry and are very roman in their interactions. This was also a side affect of the systematic racism against them. There is a mostly evil asshole version of humans, who have a bunch of power etc. Normal humans are currently screwed and on the run (yay freeks... Free kingdoms). Elves messed up some heavy magic, and are now very short lived or necromancers. Dwarf swore to protect everything form monsters in the darkness below... And did such a good job no one remembered them when they came to call on old treaties. I am sure I am missing things, but over all the way the races had meaning was interesting to me.