Somebody else has pondered this question...
Link
Interesting that he agrees with my initial assessment regarding the usefulness of shields, although not so much on the specific swords dwarves should favor.
However, I don't agree with the video in regards to strength as I think dwarves in Middle-earth are stronger than humans, which might make the big axes and hammers a viable option at least as far as damage potential. What I question is the efficiency/safety of using massive axes and warhammers as the wielder exposes oneself in their use. You don't need to make your opponent burst into ludicrous gibs through hitting them with a blow of massive strength. You need to inflict a disabling wound to them while reserving your own strength for the remainder of the fight.