I think that a Dwarf being worried about dwarven politics and another Dwarf answering "those are dwarven politics, no one cares about them" in such an obvious tone is very weird. Wouldn't the other dwarf know? And how can no dwarf care about dwarven politics? Forgath is chaotic good, so he could just have said that he has never cared about them. And, even weirder, DimMax knew it?

So, writingwise, Bunny needed a reason to hide her race from Forgath, but it had to be a reason that wouldn't be a big deal once Forgath found out the truth. My alternative would have been to have a dwarf (Bunny) steal a significant item (how about the helmet?) from Forgath while he was in Brassmoon. Flash forward, and Forgath meets the polymorphed Bunny... who is wearing his helmet. At this point, there can be reasonable doubt about whether Bunny is lying when she claims to be an elf who bought the helmet from a dwarf on the road. The point is that Bunny, who would normally try to avoid Forgath, now needs him long-term to cast remove curse. After the fight with the beast, there should be a reasonable discussion about how to kill Forgath (good thinking about the klick parts not being easily cut and possibly prolonging the agony); at this point, Bunny mercifully hands out the dwarf-killing plant, thus admitting her identity as the thief, which would be a character growth moment for both her and, to a smaller extent, Forgath.