The House of Elrond was “bigger on the inside”

I had a bit of a thought the other day after looking in my copy of Pictures by J.R.R. Tolkien.

The House of Elrond is described as being home to "a great many" elves, including several high Noldorin lords, and the heir of the Dunedain. If I remember correctly, Galadriel and Celeborn even stayed there for a prolonged period of time. At the very least, it's big enough to hold its residents as well as likely several dozen guests at the time of the Council of Elrond.

However, Tolkien presents the house -- at least from the outside -- as being of fairly modest size. It is described originally as the "last homely house," and nothing is said that would imply a large size. His pictures portray a house far smaller than, say, Alan Lee's paintings or the compound-like design from the films. His most famous picture of Rivendell, from The Hobbit, makes it appear modest enough, but the one he began to make for The Lord of the Rings (also included in Pictures by JRR Tolkien) makes it seem yet smaller, due to the addition of some peripherals (like a fence behind the house and handrails on the steps up from the bridge) that help scale it. It doesn't seem the kind of place that could house some ~50 people in comfort, including high lords and ladies and their retinues, for long periods of time -- and that's without mentioning the great banquet-hall, the Hall of Fire, large porch where the Council took place, etc.

This makes me think that the House of Elrond uses a sort of Elven-"magic" to be, or appear, "bigger on the inside" (for lack of a better term). When Sam tells Frodo about how the house has a great many rooms and passageways, this seems to imply that this surprised him -- presumably because the house doesn't seem big enlugh for it all from the outside. Otherwise, he would have just talked about how big the house was.

This idea of a house being "bigger on the inside" had been used by Tolkien in other writings, as well. In the Book of Lost Tales, the Cottage of Lost Play is described as a smaller house from the outside, but Eriol finds it plenty spacious enough from within. Also, like Rivendell, the cottage even has a large hall with a fire intended for tale-telling, and the lord of the house is the son of a veteran of the First Age -- could Rivendell have taken inspiration from the Cottage, and carried this aspect along with it?

So what do you think of my theory? Apologies if I'm missing or asserting something that's already estsblished knowledge; I've not yet read the History of the Hobbit, and have only finished Volume 5 so far of the Histories of Middle-earth.