Cryptonite himself states in his wiki:
We kept it old school and purposely avoided the PoS and memory hard algorithms, there were also time constraints and other good reasons, plus we want to leave the door open for interesting Cryptonite variants.
Elastic could be such "interesting variant". I see no reason why PoS should not work for the mini-blockchain approach.
Also the mini-blockchain approach is similar to what I have suggested a few weeks before: the concept of "moving checkpoint" that allow to discard everything prior to that. Glad that someone already evaluated it and carefully wrote down the idea along with an evaluation (also in terms of possible attacks) in a white paper, we can safe some time here as we do not need to reinvent the wheel.
That seems way better than all existing PoS, I wonder why noone did it before, cryptonite isn't that new...
In the same spirit against wheel reinventing, it would be useful to check out the abandoned zennet that someone before mentioned, if you haven't already.