I think she's both
Athel Loren is on the border of Brettonia and has always been a fae place of magic and unusual happenings. She is not *just* an elf sorceress, but the pictures of herself, and the fay enchantress model - have pointed ears.
Have you looked at any of the Wood Elf special characters? Ariel has large butterfly wings, great control over life, Orion is a spirit creature who regenerates with the seasons, Naestra and Arahan cannot die while the other lives. (I don't really think Ariel and Orion are elves in the real sense anymore, they are spirit creatures more than anything.)
She could easily have been imbued greatly by the forest and inspired to assist the Brettonians in their greatest hour of need. Fooling them into doing their bidding? I disagree, she is no longer a wood elf - though she *seems* to have started as one - she has nothing to do with her kin in the woods, taking more time to focus on the brettonians, teaching their special children the ways of magic. When I read the Brettonian armybook I was rather surprised by the spell lists open to them, I even asked my partner "Why is there a wood elf picture?" when I saw a picture of the fay enchantress! (Wood Elves: Life, Beasts and Athel Loren lists, Brettonians: Life, Beasts and Heavens for the Prophetess)
As for "She's tricking brettonians!" I think that's more just pre-match posturing
