Speaking in Elvish, and subtitled? This sounds exaggerated. There's very little Elvish speech in the book, the odd greeting like elen síla lumenn' omentielvo, plus the two songs. I see no reason to subtitle the songs since most of the Fellowship who heard them didn't understand Elvish either.

Are they inventing new dialogue? This is quite possible. There might be scenes where Tolkien just described, say, Elrond and Gildor having a private talk away from the others, without writing down what they said. A screenwriter could invent the words and get them translated into Sindarin.

The Elves spoke the Common Speech in the presence of others, as did all people. Or are they thinking of inventing some background chatter in Lórien? I suspect that the only subtitling will be of one or two lines.