The didn't quite "morph" back into humans, but they were able to hide themselves among humanity without cutting off their ears. Most elves in the Earthdawn era were just like elves today. Their lifespan may be in the hundreds of years (no one's really saying exactly how long they live). Only a small fraction of elves are truly "immortal".
Likewise, the other races didn't morph back, but as the mana-level fell, more and more human babies were born to the other races (except, of course, Obsidamen, Windlings and T'skrang, later on that). As the older generations died off, people lost their "race".
The Obsidamen most likely rejoined their liferocks and "fell asleep" as the mana-level dropped. They may be back at a certain point in the future. No one really knows.
The Windlings have become Pixies in the Sixth World. Not sure where they went in the low mana-cycle (maybe they hid and have been here all along), and nothing's really been said of it.
T'skrang *shrug* I honestly have no idea. Maybe they reverted to human form, maybe they died out. Some SURGE traits can say that their genetics still exist in metahumanity, but nothing's been mentioned.