I've camped at the lake and hiked in the area. It ought to be a beautiful ride. At first I thought the elevation gain would be extreme - none of that area is flat. But, after reading the breif description, it shouldn't be too bad. If it's the main road between those cities they are moderately well-traveled 2-lane 50 mph roads. I don't remember much in the way of shoulders (but I was driving and not looking for them).
I think I'd be tempted to do the Elgin option, my memory is that the road gets prettier as it gets closer to the lake, but I could be off on that. The campsite at the lake is a very nice one for car camping, nice facilities and moderately private for a public campground.
I'm booked up this year, but plan on bookmarking the site for next year. If you go, you'll have to report back.