That fight in the dwarven mines is one of the tougher ones. I didn't have too much trouble at a bit higher level, but did need to withdraw into the next room so I didn't have to deal with the dwarves and Moriendor's Hell Spikes at the same time (only a couple dwarves and Moriendor followed me, and were quickly dispatched).
I would hold off on strength for awhile, and start getting your agility up. Check out your offense (chance to hit) and defense (chance to be hit) in your character stats pane (hover the mouse over each for details). The maximum chance to hit is about 95%, while the minimum chance of being hit is something like 20 or 25%.