Is genocide a word they use in the lore? Personally I can't respect a man who does that, whether it's good tactics or not. It's just plain dishonorable. But that would be the fault of the man, not the weapon.

That was the point IMO, that the elves have pointed ears and the axe's blades symbolize that unique physical attribute. 

Hmm, yes, indeed. Never examined it up close. Probably because I only finished Companions questline twice 

Probably 'anthropomorphizing' - giving an inanimate object or animal the qualities of a person.

It's made from Ysgramor's own tears!!!!  http://www.uesp.net/wiki/Lore:Wuuthrad 

None of the above, I don't think. It's adding character, at most, but personification and anthropomorphism are a little more involved than simple design choices.

I agree. In this case, I think the design serves a dual role: 1) a statement of purpose or intent, and 2) physchological warfare/operations.