Each elf comes up with a bladedancing score. This is equal to the character level of the elf, regardless of class. Half elves have a blade score equal to their level times 3/4, and other races have a score equal to level times 1/2. Bards add 2 to their effective level.
There are three modifiers used in the blade dance: Int, Dex, and Cha. Double each of them. The two combatants decide upon a particular blade dance, agreeing upon one of a suitable difficulty.
Each round, the combatants roll simultaneously, adding the modifier of their choice (although in three rounds all modifiers must be used). Each time one combatant succeeds and the other fails, they move one step closer to victory. Each time they fail and their opponent succeeds, they lose that step. The combatant who reaches three steps wins -- in mid-dance, their blade flashes and their opponent drops, reduced to negative hit points equal to half their Con score. Onlookers see only a beautiful, intricate dance between the two opponents.
Use of magical weapons is considered terribly rude, and confers no benefit to the user. Most dancing blades are longswords or rapiers, but scimitars are used by elven druids.