skill dissection: Stone sheath

Stone sheath
For 10...30 seconds, attacks made by target foe and all nearby foes deal earth damage and cannot cause a critical hit.
5 energy, 1 cast, 15 recharge (ELITE)

compare this to
Dulled weapon
For 5...17 seconds, target foe and all nearby foes cannot achieve a critical hit.
10 energy, 1 cast, 12 recharge
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The fundamental difference with the skill, is converting damage to earth damage isn't all too useful, as that is what sets it apart from a normal skill: Dulled weapon.

Uses for this I can think of include Mantra of Earth and Ward against elements (highly conditional). Elemental resistance's downside would be negated, but that is assuming the hex isn't stripped off.

The again, you could have everyone bring shields with +10 to earth damage, or wear Geomancer's armor...

Offensively, it screws up usage of
-conjures
-judge's insight/heart of holy flame
-glimmering mark casted on your team (sort of, since most rely on spells regardless)
-Mark of rodgort casted on your team (sort of, not really since most rely on spells)
-apply poison
-kindle arrows (not so much)
-Avatar of Balthazar (not so much)
-barbs
-grenth's grasp
-order of apostasy
-iron mist
-mark of pain
-order of pain
-order of the vampire
-weaken armor
-winnowing
which are all pretty narrow in the grand scheme of things.

The critical hit portion only affects assassins and :
-Disrupting accuracy
-Go for the eyes' critical, which is a non-issue since it is used for energy
-Find their weakness
-critical chop
-Primal rage (a mediocre elite anyway)
-keen arrow
which are even narrower in scope if you in any portion where there are few assassins.

Too bad it doesn't convert spell based damage, all of which is armor ignoring except for elemental damage.

It's a nice cover hex at 5 energy as well but an elite cover hex with 15 recharge is kind of dumb, to put it bluntly.

Obviously, it synergizes with things from the ranger like Dryder's Defenses and Storm's Embrace; Storm Chaser.
Dryder's Defenses already has 75% block chance so the benefit is marginal n this case and it is not maintainable even with skills such as Oath Shot.
The only one that truly benefits is Storm's Embrace since it keeps it going. However, a run skill requiring elemental damage from a hexed group of mobs is not favorable conditions to keep the stance going. Storm Chaser as a form of energy gain is akin to using Mantra of Earth since the only damage changed to earth damage is weapon based damage. You would have to to be rather desperate to use Storm Chaser for the energy regardless.

Perhaps it could be synergized with the "Winter" spirit to trigger Spinal Shivers, but it is by no means increasing effectiveness.

On a single Character basis, stone striker changes all damage to earth damage. So the only consideration is for the team, in the cases with stone sheath. Stone striker lacks the negation of criticals, however.

This all doesn't equate it to an elite skill, it hardly has any sway as a normal skill either. How often do you see Dulled Weapon being used? Dulled weapon potentially screws over any assassin.
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None of these above mentioned scenarios is game-breaking, so I fail to see why this is an elite.
In fact, since it only affects weapon based damage, it is nothing a bonder cannot replace.

Imo you pretty much justified the reasons for it being elite in your post. Sure, it's not a great elite, but it is 5e cheaper and in a more useful attribute line.

Having the whole party take +vs earth/mantra of earth is some pretty significant damage reduction. Stone Sheath removes the need for everyone to have Stone Striker too.

Using a bonder is at least 3 skills on bar; this is a single elite, on a non-monk character. I wouldn't say the two are interchangeable.

Finally, _all_ characters can cause critical hits, not just sins. Dulled weapon on warriors/rangers/dervishes is a huge damamge reduction.

Interesting and well-thought out post though.