Kyrians just ferry souls to Shadowlands. It was Arbiter who decided which afterlife are you suited towards. I wouldn't say all night elves are automaticaly candidates for Ardenweald, but given their cultural focus on druidism and safekeeping of the wilds, quite a chunk of them will probably end up there, if they do not turn into wisps and stay on Azeroth.
The problem is, Elune deciding not saving night elves in order to help Ardeanwealds stability, and in that stability of the whole Cycle of Life and Death could be actually interesting and if handled well, you might make night elves "chosen" race which plays vital part in their sacrifice. It could be good. Problem is, we are shown this "Sophie's choice" decision without proper development, stamped in the middle of Korthia campaign, without any previous build up of Life-Death dynamics Ardenwealds is supposed to be about.
I guess it might be their initial goal with this storyline, but rushing it to its end definitely does not do great justice to the overall storytelling from BfA onwards.