A lot of Elemental's features (magic, quests, champions, dragons etc) will be modded into Civ5 eventually, just as those things have already been modded into Civ4, but I'm not afraid it'll compete directly with Elemental. For one, it won't have tactical battles, it wouldn't be Civ5 if it had tactical battles - just like every previous civ game, it's going to revolve around city/economy micromanagement with very streamlined combat. Even if they mod in earth-shattering spells and dragon allies and such, Civ5 won't let you watch those things annihilate entire armies at once, and what's a fantasy game without epic battles?
So let's say you don't care about tactical battles, you don't even want to sit back and watch your dragon flame broil the enemy army, you just want fantasy-themed turn-based strategy. You're still going to play Elemental instead of a Civ5 fantasy mod - granted, Civ4 has a great fantasy mod that approximates many of Elemental's features, but it's taken them years to get that far, and it'll be a long time before Civ5 has a similar mod to compete with Elemental.
Anyway, although I don't doubt Civ5's quality in the least, I just think it's going to fill a different niche in the market than Elemental will. The only way Civ5 can compete directly with Elemental in the fantasy-TBS-niche is by being heavily modded, which won't happen anytime soon - and even when the modders have done everything they can with Civ5, I doubt it'll compare to a game designed from the ground up to be a fantasy TBS.