Feif, I would wear sleeves to cover the elbow. I wouldn’t at this point in my life do LESS than I normally do, but in a community where everyone dressed even MORE covered up, so would I, or not go there at all. The point is to act with derech eretz and not be “in their face” when we possibly dress a little more relaxed than they do.
Some people (such as the rebbetzin you mention) btw, do feel that the top or middle of the elbow is the cut off point. I used to dress that way, but over the years adopted slightly longer coverage. I don’t view it as being more or less tzniusdik than others, it’s just how I have evolved over time.