Why not both? Anybody who says alcohol isn't a solution failed chemistry. People would even sometimes say that alcohol was healthy with a straight face.The story about it being a hallucinogen is false; although lots of things were included in absinthe before food regulations.
Traditional absinthe contains thujone, which is toxic, but all told would be significantly less toxic than the alcohol. America and the EU limit the amount of thujone to less than a 100th of what traditional absinthe had.
There are no mechanics, and it's a good thing there aren't. Murderhobos would never drink if there was a concrete penalty.
Also, nobody wants to do nuances of how drunk you are (# of ounces of alcohol * 500/ (con score * weight) = # sheets to the wind, see chart for consqeuences of being 1-4 sheets to the wind; wait should we roll something? DO dwarves get a bonus?)Red dragon inn not withstandingFolklore, probably starting with the start of the iron age.Actually, where did the tree-hugger elf trope start from in the first place? D&D?
With the romantic movement of the 19th century both elves and nature became "good".
People used to believe they were magic, as immortalized in the most famous song about a love potion.