...But the reality is, the single biggest thing holding LH back is the brand confusion...
If your concern about embracing the 'Elemental' name is the 'baggage' from Elemental's release, I think you have 2 options:
1- run away from the 'Elemental' name (the marketeers would say 'rebrand' or some similar spin, but I'm not a marketeer so am speaking plainly).
1- embrace the 'Elemental' name.
I'm not a businessman or marketeer, I'm just an old guy with an advanced degree from the School of Hard Knocks, so take the following with that in mind.
Option 1's reasonings are obvious and no doubt you're well aware of them, and you also have folks who can make this argument. So... I'll address option 2.
By 'embrace' I think of Tyrion Lannister's advice to Bran Stark regarding Bran's being partly paralyzed -- own your weaknesses so others can't use it against you. Turn a negative into a positive.
Exactly what happened with the release of Elemental? What happened is:
-you screwed up
-you told the truth
-you accepted responsibility
-you not only fixed it (Fallen Enchantress), you improved it (LH), and you even made it more than right by giving out the fix/improvement for free.
-now you're continuing to fix/improve/expand the game
That's something to be proud of.
Everyone screws up. Screwing up isn't what's important, it's how we act afterwards. That's what I'd embrace -- how you acted afterwards, how you made it right. Most big companies don't make it right, they do as little as possible while moving on to the next project. This would be a good way to distinguish SD from other companies, and build brand loyalty. Being loyal to us encourages us to be loyal to you.
Part of which option you choose depends on your target market. If you're going for a huge market (which means most common denominator type of games) then option 1 is likely the best choice. If you're going for a smaller market (of serious/dedicated/etc. fans) then perhaps option 2 is acceptable.
So, if option 1 you need to drop 'Elemental' from the name and move on. If option 2 then a simple 'Elemental LH' (and 'Elemental XX' for the next expansion). A sorta middle road for option 2 could be along the likes of 'E-LH' -- keeping the 'Elemental' part but with some distancing.
I kinda like E-LH as it's short, snappy, and doesn't run away from the past.
Then again, I'm not a businessman or marketeer so what do I know?