If they don;t live in caves, why collapse the barbican. "Yes instead of fighting to the last we'll collapse a building (tower etc.) on us." The only practical means to collapsing a barbican is to block something, now unless it was a really big barbican, big enough to block enitre mounatin passes, then it seems logical that it was to block a small entrance, ie a cave.
Now don't blame me for circular reasoning again. (especially since the last circular reasoning accuasation, along with the propagande accusation were totaly inacurate since I wasn't trying to prove they lived in caves, or the how they built the barbican, but of whether or not the city was captured, so thus I didn;t use circualr reasoning and propanganda, I can;t see how on earth you could call my post propaganda.)
Thus the dwarves unless extremely stupid must have been blocking something, since the didn't collapse the barbican in the heat of battle, it was collapsed when they heard that Myrgard had fell. So thus it seems likely that they live in caves.