I think it's fine how it is. Green troops fresh out of the barracks are going to bumble around the place whether they're elven or not, and it only takes a single promo to even the odds when attacking in a forest. As defenders, though, they're nice and solid.
And once you get Woodsman II on a few of your hunters/rangers (plus poison and treetop defense), nothing is getting more than a couple of squares into your borders. Being on forest then becomes a distinct disadvantage to defense, even for Woodsman I units. And the same unit on the defensive is almost impossible to dislodge.
Besides that, any attack is going to be very sloooow, even with haste. So you've got plenty of time to concentrate your fast-moving defenders (and less danger of a blitz from another direction if you do).
Only cavalry will move more than one square in forest, but anyone sending unescorted no-woodsman-no-defensive-bonuses cavalry into elven forest (hi Tasunke!) might as well just throw the hammers away.
So even if your borders are too wide to set up chokepoints, and the enemy is too smart to rush headlong into your stack that's fortified on a forested hill, you can easily guard your important tiles (to the point where they're tougher than cities) and make taking and pillaging them much more trouble than it's worth. I'm a big fan of pillaging harassment, but I wouldn't dream of it against the elves (especially with treants too).
And even if an all-out assault on a large enemy stack in the forest is difficult, you can harass and whittle down the stack as they move, with good odds and with little fear of counterattack.
Meanwhile, they're also the masters of other peoples' forests, so a woodsman archer or hunter on an enemy forest can make a very effective staging point for harassing raids through enemy territory.
The only wierd thing is that the Priest of Leaves, the guy so in tune with the forests that he can create the things out of nothing, can't get the Woodsman promo. But he can get City Raider

. I'd definitely let him get at least Woodsman I, and get rid of the CR.
Also, Elven Riders get a forest bonus while the Fyrdwell, who are so foresty that they ride fricking deers, don't?
How to attack elves? Apart from just rushing in early (and hopefully stealing their incense), I'd say either attack via the coast or just build a larger-than-normal stack with some woodsman archers/hunters to defend it, and just suck it up and charge straight at the nearest city, avoiding ancient forest where possible. Send a single guy to move before the rest of the stack so that the rest can attack or flee from any treants that pop up. And give your guys the elf slayer promo where possible. Maybe bring some workers along to chop the trees as you go. Also you can still scorch plains/ancient forest, though the trees and the 50% defense stays. Ummmmm that's about it really.