Well, in the PHB, the Trance feature says elves get “the same benefit humans do from 8 hours of sleep,” which if this variant rule is in play, means a short rest. Of course, the Astral Elves and 1D&D playtest elves have a different wording on Trance, which does in fact specify that you can finish a long rest in 4 hours. So, assuming that’s going to be the standard wording going forward, the variant rest rules will probably also have to account for it. To preserve the current functionality, I think the best choice would be to have Trance allow elves to finish a short rest in 4 hours instead of a long rest.

I think that should work ok as written, since it still costs a spell slot, which take a week to recover under this variant rule. Just don’t give it to Warlocks - which I think is also good advice with the standard resting rules.