Quoting the book:
Type, Subtype, and Race: You retain your original type and
subtypes, gaining the dragonblood subtype. You still count as
a member of your original race for the purpose of any effect or
prerequisite that depends on race.
Other Racial Traits: You lose all other racial traits of your original
race, including bonus feats, skill bonuses, attack bonuses,
save bonuses, spell-like abilities, and so forth. Two specific
instances warrant clarification.
So yes, you still count as a half-elf and can take racial substitution levels for it. However, you lose the skill and save boosts, the immunity to sleep effects, and the low-light vision. You would retain your size, land speed, type and subtype, languages, and favored class.