It seems like a pretty dodgy approach. If the elves shared plenty of detailed information, with no exaggerations or horror stories, the enemy wouldn't look more dangerous than it is. Furthermore, nobody would be surprised by the boost the boss gives to its underlings. Every group would know to try to deal with the boss first, which might decide between life and death.
I'd say hiding the existence of this giant mutant type would only make sense (if you can call it that) if facing it was pretty much a suicide mission. So, if folks didn't know about it, they wouldn't know to be afraid of the more or less certain death. They could keep fighting normal monsters no problem, not knowing that if the rare boss appears, they are dead. If they knew about the boss, they could be too afraid to go out to reduce the population of the normal monsters as well. It kind of seemed like this was the justification for withholding information, yet in reality while the boss is tough, it's no death sentence, especially if you do know something about it.