They already are far more advanced then us.
Quantum Stockipiles - Extradimensional storage
Shooting 20 bolts in the time it takes an enemy to run halfway to a champ marksdorf - full auto crossbows
One legendary planter feeding 200 dwarves, without light, on an inch of mud left by some water - High tech farming
Dig out a basic fortress in a few days and destroy half the stone while your at it - Mass energy conversion? Dumping rocks into another dimension? Relativistic mining speeds? My guess is they just eat all the rock but thats futuristic too
Spar for a year then wrestle a dragon to death - Remember in the Matrix where Neo gets fighting skillz downloaded into his head?
Outrunning arrows - Matrix again, only the dwarves haven't quite figured it out yet. When they do its called insanity
Eat once a month, drink twice a month - High efficiency biological ethanol fuel cells. They only eat to get vitamins and stuff, and because it tastes good and because it makes the elves mad.
The Bloodfist - duh
Atom Smashing - duh
Kitten leather armor - advanced materials science required for durable cat leather, more advanced science required to get enough of it from 1 cat (probly involve rocks).
Smoothing + Engraving stone by hand - Yes
Forging steel items by hand - Yes
Linking a lever to a bridge using 2 rocks - Quantum entanglement
Unbreakable walls/supports/equipment - no materials science involved, they just ask the rock/metal nicely not to break, or threaten the wood/bone with fire and torture.
Currencyless economy - debit/credit chips come built in with each dwarf!
Mermaid factory - Why are mermaid bone crafts so valuable? Becuase each one has 1/3 of a mermaid soul bound to it. Ethics sold separately!
http://en.wikipedia.org/wiki/File:Bison_skull_pile,_ca1870.pngRenewable Energy - Magma, Windmills, Waterwheels, plump helmet ethanol, even renewable WMD (lava). But don't worry, they destroy the natural environment anyway as a matter of principle.
Room Beyond Space - space is so last century
Perpetual Motion power plants - burns entropy as fuel. God of Blood > God of Physics
Mechanical Computers - civilization wide precautions against hostile AI