First if all, I do not see much resemblance at all between Earl Bran and Child of Elle. Where are the 7 brethren? Where's the lilly lally? No, the Douglas Tragedy was in no way derived from Child of Elle. It's from Earl Bran. Child of Elle is not a folk ballad. It's some sort of long complicated verse.
On Percy. I think this sums it up. This is from "Old Ballads," Frank Sidgwick:
"Afterwards he used it to help him in making the Reliques, though he altered its texts freely, and even tore some pages out (including KingEstmere) to send to the printer of the Reliques. These pages have of course disappeared, and we shall never know what was written on them, or how much Percy altered their contents to print in his book. But the manuscript, torn and incomplete as it is, still remains one of the ballad-collector's most valuable documents. After long concealment in private hands, it is now safe in the British Museum, where it can be seen any day exhibited in a case in the King's Library. Such is Percy's 'Folio Manuscript.'
Percy was Sir Walter Scott's inspiration, O Lilly Lally...