This is a backup of the comments from the old mod:
@ripple: I doubt it will have any effect at all on either party romances or NPC gender based reactions, simply because it wouldn't make all that much sense to check for the gender of an NPC whose gender is known. When you start a romance with Leliana (for example), the code checks for the player character's gender, not for Leliana's gender (why should it?).
So that shouldn't be an issue; I haven't checked it however.
@Danos1975: The game checks for race (H,E,D,Q) and for gender (M,F,N) to determine the model used for a character. The texture used, however, is only dependent on the gender of a character. By default, the same texture is used for all characters of the same gender, regardless of race. So your EF main character will have the same texture as your HF characters would.
Now to your question
The Custom Elf/Dwarf part of the mod allows you to use a separate texture for your Elf/Dwarf characters. So instead of using the human texture, the elf/dwarf texture you chose will be used.
To do that, you ONLY need the Custom Elf/Dwarf files.
Using the Main files without the Optional files will not result in any change to your Elf/Dwarf characters.