I agree that their existence is confounding since they were brought to MIddle Earth on an important errand, but that's Tolkien for ya!
Whatever happened to all of the "evil things" after Sauron falls? Do the Orcs slowly shed their green scaly skin and turn back into Elves or Men or both? Do the Trolls turn into stone? He never really explained much about the enemy save the Easterlings and Southrons whom Aragorn afforded a Peace treaty so to speak.
If you read the Book of Unfinished Tales you can find more information on the Galadriel and Celeborn, stories about Numenor, the Rohirrim, the Druedian (Woses), The Palantir stones, and the story of Gondor from right after Isildur dies right up to the Stewards taking over to rule it. There are also some good chapters on the Istari, but it gives most of the attention to Gandalf, Saruman, and Radagast than the Blue Wizards.
Well, even though Sauron fell, there's still Melkor to deal with, who is basically the devil of Middle Earth, so I don't think the orcs would turn back into elves. They would probably just slink back into their caves and wait for a new warlord to lead them.