This question came up at my table.I know it's ridiculous but it's good for a laugh. How would you all rule this ?
Depends on the size of the elemental, the length of the descent, and the target.
An 8th level druid can take the form of a medium earth elemental. You mention a peregrine falcon, but there are no special rules that I can find for them that make them a particular option (crunch-wise; obviously they're a great choice for dive-bombing). For argument's sake, say they could use something similar to the sprint ability the cheetah has when making a dive.
So taking multiple turns to change shape, climb high enough to make the dive, descending, and changing shape again (I'd rule it a minimum of two full rounds, but more realistically three or four, and I'd make my player use action points)... The thing is, the druid is going to take a lot of damage, too... this is literally a suicide attack.
I'd give them 5d8 damage to everything in a 15' square, with a reflex save for half damage equal to their highest spell DC. The druid would take half of this damage, but with no save.
However, at the level that the druid can wildshape into an elemental, I feel like there are more effective ways to do damage, so maybe handwaving the damage to the druid wouldn't be a bad way to handle it. Just make sure that they understand it doesn't extend to other instances of plummeting great distances.