The Insane dmg of Dwarves from Ered Luin is because of the buff of Thorin oakenshield, Killing Thorin and not feeding him, can make extreamly weak Ered Luin. The heros of Ered Luin have a normal base dmg, But with 33% of additional dmg, from thorin leadership make their dmg extreamly high, anyway, Dwarven heros can be easily outnumbered, after killed the dwarven armie, afterall they are only heros and combining heavy-medium troops with heros will destroy Ered Luin Heros.
Any Way the best thing that could make the team is fix the Fate rune, thats reason why ered Luin heros are dangerous. Because they can destroy entire mid game armies with balin rune fate. Simply deleting this rune and having to get 1 by 1 the other 3 Ered Luin heros will lvl up slower and finally will be more easy to kill.
As a suggestion I could prefer a lower dmg bonus for units on lvl 5 instead of actual hero dmg bonus, maybe 15% more dmg only to units. About lvl 10 leadership I havent got any reason to delete the 75% more dmg to nearby units, keeping in mind that Gondor can get this amount of buffs in dmg and armor easily Using Imrahill and Faramir Leaderships, and they get this leaderships in lvl 3 and 5 not like thorin ( in lvl 10) so it isnt unbalanced, in my opinion.