What a great idea, I do think there are lots of missed opportunities detailing Dwarves. I’m working on a 5E edition conversion and streamlining races and size has been one of my priorities.
At the core are fun and balance.
All races should be balanced and have the same “value” in points. It’s arbitrary, but I would choose 6 points (worth 6 ability score bonuses or three feats ) for race, 4 points for Subrace and 4 points for backgrounds.
Races should not be played to optimize a role or class, but for the role-playing aspects. Halflings and Half-Giants are of course of extreme sizes, but all other races could have a range of sizes. Making size a separate option together with talent and training, a Race can become its own thing without focus on ability scores too much.
Size includes things that depend on size and height. Combining size steps in Short and Stout one can trade speed for sturdiness without changing size.
For Dwarven racial abilities I had this in mind:
Longevity II (Aging / 4)
Resistance (Poison and Death/Necrotic)
Darkvision
Dwarven Focus
This leaves two points to spend.
In addition I would chose to make Tireless and/or Exertion Dwarven abilties that Muls inherit from their Dwarven parent. Or at least make them optional. I’m still debating various options for the effects. Similar to Elven Run, instead of an inborn talent this could be something that can be trained (which should be part of Subrace).
Racial abilities could be something supernatural, part of a character’s magical / psionic nature. As supernatural abilities, any may be learned as a psion (borrowing elements of monk and druid) , including Longevity. Minor for players, but major the world. This is a combination of training and enlightenment, eventually ascending into something more (outsider like a monk, pyreen, genie).
This can be awesome for enriching the setting, like elves have a connection to the Feywild and Eladrin may be a fey type ascension or bloodline. Dwarves need something similar, an opposite to Fey. It could be some Races of Stone based being, but with ties to both Earth and Fire (and genie races Dao and Efreet), while Fey/Eladrin are linked to Air and Water (Djinn and Marid).
The most important “ability” is Dwarven Focus, which may expand on this. Elves and Dwarves may have or develop opposite versions of Still Mind abilities.
Elves focus on multiple things at one and being aware (the Fey ancestry and Trance abilities that Athas Elves lost but may learn?).
Dwarves are single-minded and focus on confidence and conviction.
These things could be represented by having to use the lowest of two abilities in some situations and the highest of two in others.
I’m planning to detail this for a long while, but I’m too elven to decide on certain parts!