Maybe so, but even if our beetle could "only" lift a total of, say, 1000lbs over it's head, that's still a *lot* of strength in a very small package.
Make a beetle too large and it won't be able to raise anything over its head. Or at all.
There's no size you could make a beetle such that it would be able to lift that much weight. They just don't work at such sizes. You might be able to find some beetle size that makes it able to lift a few pounds or something, if you're really lucky, but that's probably it, and it would be a very inefficient size for a beetle and probably wouldn't be able to survive most of the time.
There actually used to be insects a foot and a half long (Meganeura), and other arthropods that got up to 8 feet in length (sea scorpions), in prehistoric times, and there's even an insect living today--the Malaysian Giant Walking Stick--that gets up to 13 inches long, so it's doubtful that a foot long beetle--less than twice the size of the largest known living beetle on Earth (at 6.5 inches), would be all that inefficient, if conditions existed for it to thrive (higher oxygen/temperature levels, etc).
Again, you're talking about the single strongest creature, by weight, living on the planet today. If you make it weigh a single pound (the goliath beetle weighs in at roughly 1.5-2 oz), and only make it 2/3rds as strong, by bodyweight, as some other living beetles, it would still be able to lift 500 lbs over it's head. Even if it can only drag 500 lbs, in a cart, it would still be very useful.
Ofcourse, DF being a fantasy universe, I think it's fairly safe to say that the case has atleast been made that it's not so far-fetched a critter that it can't exist side by side ettins, cyclopes, undead unicorns, and dwarfs.