[RPG] What happens if a druid is wild shaped as an Earth elemental and gets turned into stone

Like most other answers, I would say yes, two shapeshifts in a combat is legit; no, you did not make a mistake by allowing your player to wolf out and; no, you shouldn't try to claw back the ability.

One thing I would add to the previous answers is that this issue will almost certainly balance itself out fairly soon. Yes, a CR 1 creature in a level 2 party is huge. But level 2 ends quickly.

• At level 3, most classes get their archetype paths with cool powers and primary casters get level 2 spells. The wolf will be the same wolf it was before.

• At level 4, a CR 1 creature is considered a medium encounter for a single party member. Everyone will be pumping their primary stat or taking a feat. Wolves don't get much out of Wisdom, nor is there much overlap between the feats that help them and those that work for druids.

• At level 5, all classes see a major power spike. Cool abilities, level 3 spells, proficiency bonus goes up to +3. The party might also be finding minor, but interesting, magical items. While your Druid is kicking it lupine style, they won't get to enjoy any of that.

• By level 6, the Druid can finally upgrade to a CR 2 creature! Of course, at 450 XP, a CR 2 is less than a medium difficulty solo encounter for a character that level.

The dire wolf will remain a CR 1 creature while the world around it scales up. On top of that, if your player wants to jump straight into wolf form every encounter, then every encounter is going to play exactly the same for them, because a wolf only gets the one basic attack.

I'd say, let your player have their fun. Everyone should get a chance to feel like they've beaten the system once in a while. It doesn't seem to be worth the trouble of taking that away from them if the whole situation will simply resolve itself in time.

I'd honestly be more worried that a character with a d8 hit die has 28 hitpoints at level 2.

Elemental Wild Shape just grants access to different forms for you to Wild Shape into. As such, it's limited by all the restrictions and gains all the benefits of normal Wild Shape.

To answer the second half of this question, we need to know if Beast is a keyword, or if it's simply a general descriptor that could apply to anything we Wild Shape into. The answer to this is that yes, Beast is a keyword monster descriptor.

However, that is thankfully irrelevant. The text under Beast Spells refers primarily to Wild Shape, and has ancillary text that refers to Beast Shape. However, based on the text in Wild Shape, I believe that they are used in the text interchangeably and thus should be applied interchangeably for the rare case where you are not in a Beast form.

So yes, you can cast spells while an elemental using Beast Spell.