I personally think this quest is great at it's current place.
I think it would be interesting for an additional random monster quest to be added at the end except make the monsters really rare ones. Like a bounty hunt. Reward: Visit the Smith for an upgrade (+2,+2) for a piece of armor.
For the final quest: instead of the greater demon have it be something rare but random. I almost always sac the demon to avoid stat loss more than anything else...
Anyway, just my thoughts on the Dwarven quests as a whole. I love the rewards but they are unnecessary so if you get something rare just keep movin'!
Completed: All Races, All Classes. Twice.
Fastest Run: Dwarf Mindcrafter - 34803 turns. No wand of tele.
Challenge Games: C- CK (stupid ending), Platinum Girdle x10, Westside Story, Team Teleport - illiterate troll barb, Scroll of Omnipotence obtained
ULE - DE Archer