Arbiter of Wyrms said:
You mean like a pack of wolfs? Or two halfs make a whole? The cow has two calfs?
What do you mean "correct grammar?" According to Merriam Webster, its elves and either dwarfs or dwarves, whichever you prefer.
Sorry if this sounds rude, but I'm very much a descriptive, rather than proscriptive linguist, so I always balk when people start in on "correct grammar."
Well, I am not. I'm more of a historical linguist, so there still is a "correct" grammar to me.
I don't know what your point about wolves, halves or calves are. Those are different words with different histories and are completely irrelevent.
And if you step outside of the fantasy world, you'll find that dwarfs and elfs are in common usage, assuming the words are used at all. If you ever go to an astrophysics convention, you'll get rolled eyes at best for talking about white dwarves, for instance.
The pluralization of dwarves and elves started with Tolkien. Nobody had ever done it before him, and he had to fight with his editors to make it happen. That's probably why your dictionary shows both variants of the plural; because he popularized it to some extent.
I was able to find a more recent dictionary that does show both plurals as valid. Oddly enough, though, it does not show dwarvish, but dwarfish, and not elvish or elven but elfish or elfin.
I mean, really, you can't call yourself a descriptive grammarian if you don't understand the nuances of the usages of the word!