Just to start, when the elements are used, they tend to pacify everything that its magic can reach right?

Is that something everyone can agree on?

1859650
No for one they imprisoned discord and I'm sure he was quite peeved and defiantly not pacified, also it would depend on your take of NMM was she a separate entity, or Luna gone insane? The elements of harmony's affects are pretty unknown other than an oh $%^% button.
(Also Celestia imprisoned Luna as well not cured with the elements)
In short they seem to do the most efficient thing to preserve harmony whether that be pacifying a corrupted soul or imprisoning a chaotic immortal creature.

1859650
They work for greater harmony, but I wouldn't say "pacify everything the magic can reach." The users also appear to be able to exert some conscious control -- the Mane 6 were able to use them to destone Discord, and thought they could re-stone him if needed. Though why Celestia had to banish Luna instead of freeing her from (depending on your take) insanity or eldritch abomination while the Mane 6 were able to free her is a different question.

1860240 My favorite theory on the last one is that Celestia was only able to harness the power of 3 of the elements instead of all of them

1859650

I'd say no, for the reasons listed above. Also, note that whenever they used the Elements on NightMare Moon, it didn't also re-cast the petrification spell on Discord, expel Chrissy from Equestria, or do anything apparent to keep King Sombra locked away. They didn't make the TimberWolves kind or take away the cockatrice's malevolent tendencies.

The Elements seem to be a source of power and wisdom that can be tapped into by those seeking to restore harmony to something particularly inharmonious that they have in mind, regardless of whether or not the users know how to fix the situation sans Elements.

My fail-safe spell... failed!

1860627

My favorite theory on the last one is that Celestia was only able to harness the power of 3 of the elements instead of all of them

Works for me. I wrote a very short story (it was in a comment) with another angle, where the exile was an unconscious effect of the deep sense of betrayal that Celestia felt because of Luna's actions, and a thousand years later Celestia feels terribly guilty about that. And then Luna says she'd feel worse if Celestia hadn't been affected on some personal level a thousand years back.