That itself is a major change from the source material. Early fairy are neither good nor evil, per se, but fickle and dangerous to cross.
If you look at the DCC source material, though, there are non-JRRT sources for faeries and elves. For elves, Margaret St. Clair, Poul Anderson, and Roger Zelazny have a few useful ideas. I made homages to some of them in Stars in the Darkness, and tried to include at least a passing reference to all the Appendix N elf sources in The Revelation of Mulmo.
In terms of other fairy sources, Poul Anderson's The Mermaid's Children, Andre Norton's Dread Companion, and Fletcher Pratt and L. Sprague de Camp's Land of Unreason leap immediately to mind, although they are hardly alone. Obviously, Lord Dunsany's The King of Elfland's Daughter (and other works) are worth reading.
When working on the FT series, I have tried to combine traditional fairy tales with Appendix N sources and my own macabre sense of humour. Obviously, Prince Charming, Reanimator, works off of The Sleeping Beauty of the Wood and Herbert West, Reanimator (hence Westlake). Creeping Beauties of the Wood makes use of the aforementioned original published title of Sleeping Beauty for its name, but I think as you go along you will discover other references. A number of fairy stories (or related Public Domain works) are referenced, and there are a few homages to Appendix N fiction as well.
Cathbad the Meek (herbalist Wizard 1): AC 9; 4 hp; S 7, A 7, St 10, P 17, I 13, L 8; Neutral; Club, herbs, 50' rope, 50 cp; -1 to melee attack rolls. Hideous scar.