Ask Mr. Smarty Plants

Cedar ElmUlmus crassifolia (Cedar elm) with its glossy green leaves, smaller than those of American Elm, is an attractive landscape plant.  (more info) 

Mr. Smarty Plant has found that is is very hard to diagnose tree problems from a written description, but you have given some clues that will allow some reasonable guesses. Along with my guesses, I will provide some links that will help you determine what the problem may be.

The symptoms you describe; yellowing , dry leaves with the top-most leaves showing evidence of a chewing insect perhaps, could be caused by several things, but Dutch Elm Disease is probably not one of them.

Dutch Elm Disease (DED) is caused by the fungus Ophiostoma novo-ulmi which is introduced to the tree by the native elm bark beetle, Hylurgopinus rufipes and the lesser European bark beetle, Scolytus multistriatus.

The first symptom observed in American elm is yellow foliage on one or more branches, from late spring to midsummer. The affected foliage soon becomes wilted and brown; this symptom is called "flagging." This doesn’t sound like what you described. These three links have more information about the disease.

     texasinvasives.org

    USDA Forest Service

    University of Illinois

Yellowing can be a symptom caused by an aphid infestation, which seems to be common in Austin this summer. This link from  UC Davis  describes the pests and possible control measures.

Another pest  that could account for the yellowing is spidermites. Reading the two links below could make you a neighborhood expert on these little plant suckers.

      Colorado State University

      UC Davis 

Bacterial leaf scorch can cause yellowing, but the images shown in these two sources don’t look to me like what you described.

     Bartlett Tree Research

     The United States Nattional Arboretum

Since aphids and spidermites lack chewing mouth parts, we can’t blame the chewed leaves on them, however a possible culprit could be the Elm leaf beetle. The two links below give details about these destructive bugs.

    Colorado State University 

     University of Illinois 

The bottom line is that you need someone knowledgeable about tree sto take a look at your elm tree to make an assessment of the situation. This person could be a Certified Arborist , or someone from the Travis County Office of Texas AgriLife Extension.