I think people looking at Celene's actions as "right or wrong" are doing so using today's morality. Which is a different can of worms.
This sort of historical relativism strongly reminds me of people who use cultural relativism to avoid condemning things like child marriage, domestic abuse of women, harassment of LGBT individuals, etc. in developing countries. Systematically and individually oppressing a group of people based on their race and/or class is wrong no matter how you slice it, regardless of historical era or culture. The only difference is in the degree of acceptability and tolerance that most people have for such behavior in a given historical era or culture. That doesn't change whether it's "right" or "wrong."
However, when you realize that she is an empress of a country, one that is clearly teetering on a very thin wire, you see that taking action was necessary.
The action she took HAD to be crushing, as the elves by this point were too far angered to allow diplomacy. Allowing any group of people to get away with murder (literally) causes more problems.
See, again, people are so quick to condemn the elves for what they call "murder," even though their attacks only targeted the guards whereas they're completely fine ignoring the routine murder, beatings, and rapes the nobility and their guards had routinely performed on the elves for centuries. As they seemed to only be targetting the guards, it was essentially a form of desperate self-defense but people are still condemning the "elves" as murderers while ignoring the actions of the guards and nobility (and probably the human laypeople as well).
If Celene had allowed the elves to continue, she would have had yet another side of chaos, which would make her look weak and unable to do what an empress/emperor must, lead. If she is unable to lead, then why would the nobility allow her to remain on the throne?
Her actions may have seemed harsh, but what else could Celene have done? Allowed rampant murder and rebellion? Attempted to talk which likely would have lead in an attempt on her life?
Those saying Celene made the wrong choice need to ask themselves exactly what other path she could have taken.
Well it certainly would have turned more of the nobles against her and putting her on a losing footing in her war against Gaspard -- no one disputes that. And from the perspective of staying in power, it's exactly the best thing she could have done. And it's also why, like most ruling elites in any historical era, she's such a horrible person. Just as Gaspard will do anything to attain power, she'll do anything to stay in power and, like Gaspard, she'll justify it by her ego -- arguing that she does it because she's the best monarch. Sure, she'd be slightly better than Gaspard with her new monarch model but for the majority of Orlesian commoners (elf or human) it's really just asking whether you'd like to get shat on or pissed on -- and certainly not worth starting a war and massacring thousands over.
Celene could have not done it and accepted the possibility that it might lead to her abdication as empress. It basically happened because of one woman's self-righteous ego.
Although, I'm also not convinced that refraining from an all out massacre would have meant she would have lost so much noble support against Gaspard. She could have brought the armies in, executed some of the ringleaders kangaroo-court style, then impose a heavy military presence to keep the elves in line. Still ethically questionable of course, but slightly better, albeit less efficient and more risky in terms of her staying in power.
ETA:
Clearly, what she should have done was execute that noble for the murder of an innocent man. That too would have prevented a war.
If for no other reason because Celene would not have supporters left with which to oppose Gaspard.
Precisely what I've been getting at. I'm pretty shocked that so many people are willing to defend the massacre of tens of thousands just so one woman could cling to power. Celene does what she has to do to stay in power but that doesn't make it anymore acceptable than Gaspard's rebellion.