The kobolds started out spread out (again, as shown in the module), and needed to perceive threats in order to react to them, instead of acting as if they knew everything the DM knew.
And if your kobolds couldn't percieve the threat of the PCs then they were being played like they were gimped. It's 60 feet or so between the furthest of them, free action shout and away you go.
I followed the order of the fight (including waves 2 and 3) exactly. As the PCs used a side entrance rather than the waterfall entrance, there was no time at which all the kobolds could focus missile fire at one PC. (If you look at the set-up, the kobolds are pretty easy to catch in bottle-necks and around corners.)
No, it is impossible to catch them in bottlenecks a) it's too small, they can cover half the combat area in a single move (IF THEY'RE MOVED INTELLIGENTLY) b) trying to do so puts the party in plain sight of the dragonshields and wyrm priest, c) if the party knows to even try it, then your party is acting on information THEY don't have.
And this is ridiculous pilled on top of blindingly stupid that the place could be snuck up on in the first place, that the kobolds outside would fight to the death like lemmings and not flee and alert the cave when they see their allies being casually cut down. That the "gaurds" would be standing where they are where they have no line of sight.
Despite how mind-numbingly retarded the setup is, I played it like it was in the book, even let my party "sneak in" and they got a mininon too. They weren't able to kill the 2nd one though and... oh look, it retreated and... oh look, next round there were 9 kobold minions ready for the party... which was standing in line of sight of the wyrm priest/dragon shields as my party used the same entrance yours did.
It was a very challenging fight, no doubt. But the PCs triumphed.
My PCs where annihilated. I didn't gimp the encounter.
BTW, if your party beats this encounter you may as well pack in the module. It's the hardest encounter in the module, a CR6 where most of the rest is CR2, and even the final fight is easier. Just hand your party 2 levels and go on the the next module. Going through the motions of the rest of KotS is just pointless d20 wrist action. If they can beat a CR6 at level 1, the CR2s are a complete waste of time.