I think Elena's self-centered obliviousness is meant to be the way she copes with things she can't (or won't) deal with, actually. Certainly her amazing ability to not know things even when everyone in the world is telling her right to her face becomes a major character point in seaon 3 anyway. But even before that I can definitely believe that she was just going along in denial about what Damon was like right up until he snapped her brother's neck in front of her and forced her to see it. I dunno, it's just such a consistent part of her characterization (along with her manipulative streak and her need to live up to what she thinks her dead parents expected of her) that I have a hard time seeing it as anything other than puroseful characterization on the writers parts.