OK, I looked extensively at what exactly Dwarves needed. I have addressed all of your problems (I think) and I came up with the following final outlook on the faction.
[img]http://img239.imageshack.us/img239/3159/dwarves.png[/img]
Here is the reasoning behind the changes I would like to propose. Dwarves seriously needs to be able to produce some kind of food instead of having to keep building Farms, hence the goat and pig (if anyone can think of any more "dwarven" animals...). Guardian is kind of less RPG and more "dwarven" than Hero, so I like that change. Also, Dwarves seriously need some ranged allowed early in the game, so I added the axe thrower and the grenadier. The four units created by the engineer, as well as the dual onager are meant to balance out the early military abundance. The alchemist lab name is semi-disposable, but I like it. Of course it stores gold, too. Finally, Dwarves seriously needs the engineer to heal and make late-game military. To solve the ever-present problem of Battlemages still having gold, the engineer will also be able to mine and harvest and will not have an attack.
Goat- produces 5 food
Pig- produces 10 food
Guardian- same stats as Hero, except renamed
Axe Thrower- Finally Dwarves can get a little early ranged military
Grenadier- throws grenades and has higer armor and attack speed than the Cannoneer; also has a splash of 1
Dual Onager- a large boulder is fired using a dual-strength steel spring
Alchemist Lab- built by Worker and requires a Foundry. This building will store Gold
Tank- Dwarves will get much-needed recon with this unit; it is the fastest Dwarven unit, but is noticably slower than a Horseman
Rocket- This will be like a Dwarven ICBM; it is not a superweapon however, just a long-range misslile with a large, slow-moving splash
Giant Trebuchet- I'm thinking about size value 6 here; it should be able to fire 30 tiles, but have a 20 second reload time. It will be on a turntable so it doesn't look stupid when it turns
Dwarven Ballista- this is smaller than the Giant Trebuchet, can fire land and air, and can fire 15 tiles.
Engineer- This unit morphs from the Worker but can still mine and harvest. It can also heal military and repair buildings
I found an article on the Dwarven diet
here. Maybe this can help...