The latter, at least on my end.
The thing here is that the Ar-Ulric has no power whatsoever over Laurelorn and can't really stop them from worshiping Ulric differently. What's he going to do? Send an entire army against a forest that has been carefully cultivated over millennia to repel any invaders? A place so well-defended that
a Dwarven Throng from the Golden Age wasn't able to come back from? He might as well send a politely-worded letter, that might have more of an effect.
Already the Ar-Ulric has the credit for converting the Eonir to Ulrican worship, so he's already on shaky ground regarding how Ulric is a human god worshiped by the Teutogens. And the Vow of Celibacy was something imposed on the Cult by Middenheim's ruler in the past to prevent a rival dynasty springing up - Middenheim
cannot enforce this on them,
wouldn't do so if it could because it'd risk their alliance with them, and has
no reason to do so even if they were already firm allies, since the Eonir have zero chance of coming over and deciding they want to rule over human lands.
The resentment isn't going to be toward the Eonir - the update clearly states that the issue is that if the Ar-Ulric were to do it, it'd aggravate the people that already disagree with including elves in Ulric's worship. That's what we should really be concerned with... But even right now a big part of the conflict is that the wider Cult of Ulric doesn't want their worship of Ulric being dominated by Teutogen supremacists, or limited only to men. If the Ar-Ulric takes this risk, there's a chance he'll be able to take some of the wind out of Nordland's sails. Some groups that may have been inclined toward Nordland might go back to being on the fence.
And, again, it'd nip a problem in the bud. We can't expect a future Ar-Ulric will necessarily be that well-inclined toward the Eonir. Establishing a precedent
right now that the Eonir are to be given a free hand on how to do things would go a long way to preventing further tensions which may be a lot harder to throw off later.