@ratboy, you are correct: it is not in the OED. I just checked both editions of the OED that I have in the house and am very surprised to see that neither of them shows “dwarves” at all.
However, my American Heritage IV, my big Webster’s Third (not collegiate), and Dictionary.com all list “dwarves” as an alternate plural, after “dwarfs.” Various online explanations, including this handy one on Wikipedia, give the etymology and attribute the popularization of the “v” plural (analogous to elves, wives, knives, wharves, etc.) to the writings of Tolkien, who was first of all a language guy.
So, @rangerr, I withdraw my comment as a correction, with apologies. Please regard it as an alternative.