You'd need to check the dates, but David Weber's War Gods series has the half-elven Purple Lords.

Of course, if that's the one she's thinking of then she's missed the part where they only breed true with either full elves or other half-elves and also elves were artificially split off from humans and may not be all that genetically distinct yet due to their long lives anyway.

EDIT: Also, I'm not sure how Zuko is supposed to be 'not sane'. He doesn't suffer breaks from reality, his behaviour is in keeping with his upbringing, and he is clearly able to function in everyday life. What's supposed to be 'insane' about him?