Tim Dierks <tim(_at_)dierks(_dot_)org>:
[...]

- The only substantial difference is that in ElGamal, the sender
uses a temporary key, while in my description of Diffie-Hellman,
that key must be authenticated.

The mechanism which Diffie-Hellman described in their famous published
_paper_ involves a "public directory" which contains everyone's
parameters. All users share the same prime and generator.
The _patent_ (which actually lists Diffie, Hellman and Merkle as
inventors; so a more correct name for the cryptographic operation
appears to be Diffie-Hellman-Merkle) does not mention this variant.
It describes Diffie-Hellman exchange (where each side create a
_fresh_ exponent x_i and sends g^x_i to the other one) and also
includes the scheme which ElGamal encryption is based on: The
recipient's key y_R = g ^ x_R is known and fixed, and only the
sender's exponent x_S (and thus also the transmitted value g ^ x_S)
is ephemeral. The resulting value K = y_R ^ x_S = (g ^ x_S) ^ x_R
can then be used as a key for some symmetric encryption algorithm
(which, according to the Diffie-Hellman-Merkle patent's text, results
in "authentication" of the recipient -- today we'd call this whole
process "public key encryption"). Typically, you'd select the
lowest 56, 64, 128 or ... bits (as needed) and use them as symmetric
key or -- better -- use a hash of K.
ElGamal's idea amounts in doing Vernam encryption with key K
(one might prefer the name "pseudo-Vernam", because K is not really
random when all the transmitted values become known; also, possible
valuse for K are usually restricted to a _sub_group of (Z/pZ)*).
Typically Vernam encryption -- the "one-time pad" -- is associated
with XOR, but any finite group works just as well; in the case of
ElGamal, the group is either (Z/pZ)* or (Z/pZ), the former being
more common.

Based on this, I believe ElGamal to be a better alternative than
Diffie-Hellman.

ElGamal encryption is just a certain application of Diffie-Hellman.
The name "Diffie-Hellman" alone does not reveal how key K will
be used later in the protocol.