Does Catholicism confound the role of "elder" and "priest"? I am somewhat interested in joining the Roman Catholic Church, but there are some things that I've had to further investigate, one of which is the role of "elder" and "priest" in the Roman Catholic Church.

Priest

Here is my understanding thus far regarding the word "priest."


In the Old Testament, כֹהֵן = ἱερεὺς = "priest" (Masoretic = LXX = KJV)
In the New Testament, ἱερεὺς = "priest." 


For example: Gen. 14:18 in the OT, and Matt. 8:4 in the NT. In summary, ἱερεὺς is used in the LXX and the Greek NT, and in both, it is translated consistently into English as "priest."



Elder

Here is my understanding thus far regarding the word "elder."


In the Old Testament, זָקֵן = πρεσβύτερος = “elder.” (Masoretic = LXX = KJV)
In the New Testament, πρεσβύτερος = “elder.”


For example: Num. 11:25 in the OT, and Acts 11:30 in the NT. In summary, πρεσβύτερος is used in the LXX and the Greek NT, and in both, it is generally translated into English as "elder" and seldomly "presbyter," but never as "priest."



The Catholic Encyclopedia's entry on the English word "priest" states,


  The Christian law also has necessarily its priesthood to carry out the Divine service, the principal act of which is the Eucharistic Sacrifice, the figure and renewal of that of Calvary. This priesthood has two degrees: the first, total and complete, the second an incomplete participation of the first. The first belongs to the bishop. The bishop is truly a priest (sacerdos), and even a high-priest; he has chief control of the Divine worship (sacrorum antistes), is the president of liturgical meetings; he has the fullness of the priesthood, and administers all the sacraments. The second degree belongs to the priest (presbyter), who is also a sacerdos, but of the second rank ("secundi sacerdotes" Innocent I ad Eugub.); by his priestly ordination he receives the power to offer sacrifice (i.e. to celebrate the Eucharist), to forgive sins, to bless, to preach, to sanctify, and in a word to fulfil the non-reserved liturgical duties or priestly functions.


Notice how it equates "priest" and "presbyter." ("Presbyter" is simply a loan-word derived from the Greek word πρεσβύτερος. Loan words are essentially loose transliterations, but not translations. The translation of πρεσβύτερος would be "elder.")

I understand "priest" is etymologically derived from πρεσβύτερος, but πρεσβύτερος is consistently translated into English as "elder," not "priest." We consistently see the Greek word ἱερεὺς translated into English as "priest" instead. 

So the question: where in the OT or NT did the "elder" - which is the actual meaning of πρεσβύτερος -  function also as a "priest" (ἱερεὺς), that is, one who was mainly tasked with offering sacrifices in a Temple? Why does the Roman Catholic Church equate the two terms?
The Catholic understanding is that the word πρεσβύτερος means priest subordinate to a hierarch, one ordained to offer sacrifice under the direction of a chief priest. It does not mean layman governor of the church, like a Protestant elder. This is consistent with NT usage, where "chief priests and elders=πρεσβύτερος" (Matt 21:23 KJV) refers to two levels of ordained hierarchy in the Jewish religion, both of whom are involved in the sacrificial temple worship. It is Protestantism, not Catholicism that has become confused by eliminating sacrifice from their religious practice, thus reducing their πρεσβύτερος to mere advisors and teachers.

NT and modern usage are correctly explained in the wikipedia article for Presbyter. I disagree with the quote from the ISV website at the bottom of the article saying that the zaqen were not priests. That appears to be an assumption on their part. Several usages in the synoptic gospels pairs presbyters with chief priests, which appears to put them in the priestly class. In one instance in each gospel (Matt 26:59, Mark 15:1, and Luke 22:66) it is clear that they are talking about members of the Sanhedrin that are not the chief priests. 

The Catholic Church derived its terminology in the Greek language from the Septuagint and koine usage in NT times, not modern Protestant usage, and not pure etymology. We need to look not just at the etymology of the terms, but also how they were actually used in NT times. In this case, it's clear that the Jewish "presbyters" were members of the Sanhedrin and thus quite high in the Jewish hierarchy. It's also clear that the term was applied by the primitive Christian church to those men who were chosen by the bishops (overseers) to assist them by administering the sacraments to congregations where they could not be physically present each week. Thus, this is strong evidence that by NT times, presbyter had a sacerdotal connotation. The primary work of the primitive Christian church at this time was not judging the people (resolving disputes or administering law) but rather conducting sacramental rites.

There is also one relevant OT citation:


  Exodus 18:21-22 (KJV): 21 Moreover thou shalt provide out of all the
  people able men, such as fear God, men of truth, hating covetousness;
  and place such over them, to be rulers of thousands, and rulers of
  hundreds, rulers of fifties, and rulers of tens:
  
  22 And let them judge the people at all seasons: and it shall be, that
  every great matter they shall bring unto thee, but every small matter
  they shall judge: so shall it be easier for thyself, and they shall
  bear the burden with thee.


Note that this passage says "out of all the people able men", indicating that Levites were not excluded.

So why, I can hear you asking, doesn't the NT use ἱερεὺς instead of πρεσβύτερος? It does use it (in the plural form ἱεράτευμα), but it uses it for the priesthood of all believers in 1 Peter 2:5 and 1 Peter 2:9. Clearly the NT is making a distinction between the priesthood of all believers and the presiders at the sacraments.