If Elves did just "turn to dust" when they died, it seems that depending on the amount of time it took for them to...dissolve (for lack of a better word) the Elves would have a sort of memorial service, and then let the dust be scattered by the wind. It sounds appropriate to me, and accounts for the apparent lacking of burial mounds. If a body was just going to crumble into dust there would be no need for burial, as animals wouldn't be able to desecrate the remains and there would be no chance of disease from rotting flesh. Of course this is just pure opinion.
