Bear in mind when reading that I am a scholar of medieval arms, armor and (especially) martial arts. Not a novice scholar, not a skilled scholar, and far from legendary or even great. But I am a scholar.
Suggestion #1 - Altering current weapon damages.
Problem: Piercing weapons are extremely overpowered, and at the same time somewhat underpowered. Instakills when the get a critical hit and piddling damage when they don't. The criticals need to be less.. critical as any single arrow can pierce up to five organs that have no business lining up in any sort of row, and that's rather broken.
Solution: Tone down piercing criticals. A lot. Boost a spear's regular damage, and reduce that of bolts and arrows slightly. Should be good.
Suggestion #2 - Altering treatment of armor to be even more realistic.
Problem: All weapons treat armor exactly the same, which is acceptable for this type of simulation, but not ideal.
Solution: Add an [ARMORPIERCING] or [MASSWEAPON] tag to weapons that are extra effective against armor. This includes all the mass weapons: picks, hammers, maces, and axes. Ideally, this tag would allow a weapon to bypass some of the armor's block percentage (either a percentage or a flat rate would be fine). For reasons I won't get into here, these weapons are extra effective against armor, and once they are granted this ability, their damage can be toned down a little. Thus, an axe might do an average of 10 damage less than a sword (even factoring in critical hits), but it negates 20 points of damblock from armor. This makes it evenly effective against armored and unarmored foes.
Suggestion #3 - Dwarves carry daggers.
Problem: There is no middle ground between 'armed for war' and 'armed for emergencies.' Simultaneously, there's no weapon that wrestlers can carry to make them more effective against armored opponents.
Solution: Introduce a new tool/weapon, the knife. You could also call it a dagger, and it would function as such. The knife would be an emergency weapon, and while dwarves might not start out with them, all dwarves would carry one, even civilians. Knives ought to do more than a punch, but less than any real weapon; perhaps 1-4 or 1-6 piercing would do the trick. They might be best used as a wrestling maneuver, as they are a 'really close combat' kind of weapon. This addition would allow dwarves to occasionally survive a carp attack, and make civilians less helpless in general. Perhaps only a wealthy fort could afford to equip every dwarf in this fashion, but it would increase their survivability rate. The knife could also be an eating utensil, giving dwarves minor unhappy thoughts from eating without one, or modifying the thoughts gained from eating. Wrestlers could carry knives, making them slightly more effective/viable, but they probably would not use them with every attack. In all cases, the knife could be given its own slot, called a 'pouch' or a 'tool' slot or something.
I don't know whether dwarves are smart enough to handle having several attack options including 'choke' and 'stab with knife', nor do I know if they are smart enough to take a weapon out and wield it. But it would definitely, definitely be a welcome addition that serves multiple purposes.