I have revised my essay on the Capitalization of Fantasy Race Names. With further consideration and additional research, I have determined that my original conclusion — that the race name should be treated as a proper noun — was wrong. Instead, fantasy race names are really common nouns, and in most situations should be lower cased (in other words, Tolkien was wrong — so there).
Rather than posting a revised essay, I have updated the old one, primarily due to the number of link backs from other sites and forums which are referencing that essay. Anyway, go ahead and check it out.