I've said it before and I'll say it again. "Disintegration. Gust of Wind" is the right four words to the right person at the right time for all the wrong reasons. It fits every qualification to the letter. I believe that V's ultimate arcane power is a direct result of the execution of Kubota. Maybe not imediately, but down the line. Just the same way Roy was the trigger for Miko's downfall by telling her off after the inn fire incident. That one incident colored the paladin's mind and led her to treat every event that followed as evidence of their evil. In the same way, those four words are the catalyst that sends the elf down a path V would not otherwise go.
As for this argument, I'd side with Elan. He said flat out multiple times that Kubota's death wasn't going to keep him up at nights, but that lying to Hinjo just might. V's accusation that he cheated on Haley when someone just died in his arms because he refused to do just that was finally enough to elicit something of a "you know what? screw you." response from Elan. Even that response came after a moment's pause and came out calm and controlled. No crying tantrum this time.
Was he feigning stupidity to avoid a fight or failing to understand due to the belief that V would never harm him? It could easily be either, and I'm sure we'll find out soon. That said, however, it felt a lot like the time Belkar refused to believe Roy lied because Roy was an admitted liar.