1. That is not a dwarf. THAT IS AN ELIN (Tera).
2. Most chuuni design award goes to "Unseen" sword. I wonder if he can increase his powerlevel by removing 1, then 2 of the eye patches.
3. Nyaaaaaa Megane Nanachi
That's probably supposed to be yet another of Peter's affirmations of his willpower over the temptations of the flesh, which is about as believable as the tooth fairy or Easter bunny but you can't blame the guy for trying. Sometimes lying to yourself is super effective.
Look, if you want traditional dwarves they're going to be about this hairy anyway even if they're female. Feel free to write your own harem story that includes bearded midget waifus, nobody's stopping you just like you're not really stopping this guy from making his dwarves look like this.