I really do think Elite has a really good foundation for something narrative. Thargoids and Raxxla and Guardians and Cobras and Sol and Achenar and the Old worlds and Hudson and Halsey and The Bubble and Colonia and Witch Head and Sirius expansion and Canopus and the PowerPlay powers and the corporations and the pirates not least the Pilots' Federation. Politically, geographically, visually, emotionally, there is quite a lot of potential. You could do a good campaign in this.
I think the tricky thing is implementation given the multiplayer and open world environment.
There's a big compromise between player agency in the story and the ability to make a coherent plot, for example. With so many players, so many player groups all with their own priorities, aims and egos, and so many ways for those players to attempt to influence the story or the underlying setting, it's very hard to meaningfully integrate player agency into a story.
But if you don't integrate it, then why bother putting the story in game at all? A book is a much easier way to tell a story, if that's all you want to do.
And there's obviously a big difference between solving this issue for a tabletop RPG, where the GM and the
very small number of players can cooperate to make a story work, and for Elite Dangerous where even just counting those players with a demonstrated interest in story events the GM has to work with a few thousand competing and adversarial players, not to mention the side effects of the actions of people who don't care about the story at all.
That's not to say that they shouldn't try - I think the Interstellar Initiatives were definitely along the right lines, and made things more dynamic in a way that the BGS alone can't - but it's always going to have big limitations.