A while ago on another AT discussion board I read an interesting commentary from an international ballroom specialist, a world class dancer and adjudicator, to the following video:
http://www.youtube.com/watch?v=mqMQxaRoLLk
(Unfortunately, the discussion was not in English, so it would be rather pointless to post a direct link here).
According to his analysis, based on musicality, posture, connection, alignment, movement dynamics -- all the basic criteria the IDSF judges look for in the first place -- those couples of old milongueros, should they suddenly appear on a ballroom dance competition floor, would get very high scores.
So, surprise, basic criteria for elegance in partner dancing actually do not differ that much from one style to another, because the law of physics, physiology, the body mechanics we have been working with are still the same. Elegance from that point of view is efficiency, effortlessness in musical expression.
Of course, at times it takes a trained eye to see the good from the bad and the ugly.
Now, I realize that the majority of dancers the OP has observed at his local milongas might look very different from ones we see in the video. Still it is not enough reason to claim that close embrace Argentine tango cannot be done with elegance. This kind of statement, at best, comes from a rather uninformed place, and at worst, is inflammatory.