In my experience high site cap relative to world size will tend to cause any and all civs to spread wildly, including cozying up to probable enemies.
I'd guess that you've hit a spot in the algorithm where the history genner says, "We have X resources but only Y sites. We should start another one." They won't care whether it means trekking across the continent into the heart of enemy territory. In your posts you describe them as "dying, far from healthy" civs whose hillocks quickly fall, but I'm fairly sure nobody in worldgen has the ability to make that value judgment. Inside the simulation they still measure themselves as "ready to expand (again)."
(Start thinking of them as scrappy perpetual optimists. They start that next hillock because the only certain failure is never to try. Or, if you must be dark and pessimistic, because they have to keep on the move before the evil empire catches up with them. Either way, the last thing they want to do is stop.)
Why do you feel like it's always dwarves? The other settings could influence that: low # of civs and smaller worlds both tend to exacerbate the winner/loser perception because there are few (or zero) alternatives of the same race to succeed when one of their civs suffers. Add to that, dwarves suffer a distinct bias in Forgotten Beast attacks. So your dwarves may hit this spot where they have fewer sites/population than "desired" more easily, yet so long as they are not knocked out completely they will attempt to expand. Meanwhile, the elves (as an example) may hold the advantage in a centuries-long running war against the dwarves; their initial settled retreats prosper; they command dozens of conquered sites besides; and either don't feel the same pressure to found new sites so quickly or you don't notice because the ones they do start aren't "failing" in the same way.