For generations we have opposed the Fae. We wish to farm and raise families, build our own cities, and generally live our lives as men. They twist the world into their images of beauty whose form change every day. Woods that one day provide apples good for baking the next will provide red fruits which burst into flocks of butterflies. With such wonders they have stolen our children and left our lands barren.
We cannot match their mystery and magic but we have one advantage, iron. None born of the Fae and few among the Stolen can bear to touch it, much less wield it. But mere swords of steel were not enough to stop their sorceries. We needed sorceries of our own.
Now we have them. Great edificies of gears and rods, powdered by steam not magic, are our sorcery. Let the Fae cast their spells that can twist wood or raise the waters. They cannot stop a fist of iron the size of a man or drown a ship of steel driven by the fires of a thousand pounds of coal.
Now we will claim the land and make their magic go away.
A steampunk world where humanity, chaffing as the second fiddle to elves for millenia, has invented grand technology to combat magic. For as long as anyone can remember the Fae have stolen children and enslaved humans. No human nation has lasted past its founders great-grandchildren before drifting away for lack of children or outright conquest.
But in deep caves and hidden groves men have been working. Forging tools of metal, first bronze and now the dark iron that burn the Fae at a mere touch. Charcoal flames, first used to just bend metal are now used to move it. The modern human nations in just two generations have turned two millenia of hidden human research and oral traditions into their own magic, that of steam. Now they are ready to strike back.
You can be human defenders of nations under siege, warriors striking at elven woods, or great steam mechanics building the weapons of the day. Participate in scorched earth campaigns where elven forests are cut down and cooked into charcoal to fire the great and lesser machines of war. Or perhaps you are an elf…a traitor to your kind sickened by the treatment of man but trusted by neither sign or elven commandos send to destroy the infernal factories and gear plants.
Steam powered power armor, primitive cybernetics, swords of meteor iron, and most of all the power of the assembly line making the later are pit against ancient elven magics. This would probably work best is something like BESM, M&M, or regular D20 with all the steam supplements. If going retro-clone the best choice would probably be S&W or another minimalist set. No human magic users but one of the many inventor type classes out there would be perfect. A typical D&D end game could focus on reclaiming lands haunted by the greatest monsters of all: elves.
For literary source, the creepy fae required could easily be found in the Fairy Books of Andrew Lang. Steampunk could be Victorian/Edwardian proto-scifi or more modern material.