If a great game like Elden ring would've had cosmetic sets you could buy, would it have undermined the "greatness" of the game? I really don't see it happening.

I agree with you that people mainly care about the game being good. However a game's budget is more or less fixed. If From had made a bunch of cosmetic sets it would be taking away resources from making the "main" game, and it may not have been as great and polished as it is.

Also, once you have microtransactions in a game, there's going to be a temptation to maximize the revenue gained from them, which can lead to the aggressive strategies you mention.

I'm not saying it's impossible to do mtx without ruining the game, but it's difficult. Without mtx, the only thing you have to maximize your revenue is to make the game as good as possible, and so everyone involved in the game's development is aligned towards that goal.

Once you add mtx, there will be people involved whose main goal is to maximize revenue from the mtx (and I'm not saying those people are evil or want the game to be bad; they're just doing their job). And so a sort of tug of war starts to happen between devoting resources and design decisions to make the game better, or getting people to buy your cosmetics. Finding the right balance through that mess is difficult.