As much as I hate the ladies at Radiant Raiment, I also have to say that equating expensive with tasteful is something only a truly tasteless person would do. Wearing any kind of blood-stained battle armor to formal occasions like a Jarl's court seems tacky. Elisif may find it politically necessary to deal with you, but as soon as you leave she and the thanes have a good laugh at your crude manners.
Given what I've seen of the court at the Blue Palace, Elisif and her entourage can all bite me.

If I'm wearing armor, it's because I'm a warrior. You'll notice that "hangers on" in the Jarls' digs in other holds are often wearing their armor in the Jarl's presence when he is on the throne holding court, provided armor-wearing is a part of their job description. Hell, the other Jarls, even the lay-dee ones, are wearing armor type stuff when they are on their thrones holding court.
Having a formal dinner with lots of posh invited guests? Yeah, formal attire, no armor, fine. Everyday goings-on? Bah. Armor seems fine. Everywhere except Solitude. Probably another reason I don't care for it too much.
And even if they have a problem with it, there's no reason for two members of the freakin' merchant class to be snotty to moi (do they have a title? No? Well I DO). All they have to say is, "oh are you going to the Blue Palace? We have a fine line of formal apparel that would be appropriate. Let's find something you like!" But no, they gotta play the I'm An Altmer Snob card. Bah.
With a few exceptions, Solitude is a city full of snobs and milk-drinkers.
