Orcs... were elves?

[Animalmother]

Treebeard identified Merry and Pippin as orcs. As were hobbits, most orcs were subterranean creatures small of stature. As were hobbits, they originated in the Misty Mountains region. In THE HOBBIT, the orcs were fond of rough song, as were the hobbits. In the wilds of Misty Mountains where they were not under the discipline of a Saruman or Sauron. their social structure was based on small clans, as was that of the hobbits. Like hobbits, the orcs are omniverous.

The elf-origin of the hobbits theory may simply be due to the obscurity of hobbit folk. A modest folk with much to be modest about, other races didn't notice the hobbits. There was no place for them in their histories.

When the hobbits emerged into history and began to write their own history, they could never imagine fellow hobbit folk as the origin of the horrible orcs.

Elves were creatures of tree and forest. Men are creatures of the plains. Hobbits were partly subterranean creatures. It would be much easier for such a creature to transform into a completely subterranean being than it would be for an elf or a man.