And it is definitely true that the whole house elf thing is clumsily handled, and a sort of weird B plot. I think it would have worked much better to have, say, free elves working at Hogwarts from the get go, but owning elves is still legal and something a lot of older families do. That would make it clear that elves are not by their general nature inclined to be slaves, and that wizarding society is split on the issue.
Why would that be better? That just removes the idea that people you know and love are also part of upholding this system, and instead it's those elitist meanies over there that are at fault.