Moorcock's fantasy stuff often gets labeled as 'sword and sorcery' and, to me, the Melnibonians were always pretty much elves by a different name (and a, slightly, nastier disposition).
So yeah, I can see them in an S&S setting...
Dwarves are harder for me... I loathe most fantasy depictions of dwarves...
in fact I can't think of any I like.
Maybe make them a degenerate, lean, albino race of subterranean burrowers... who only go above ground by night... who have some really atrocious/nauseating habits... yeah, I could go for those in S&S too... kind of like the Morlocks out of 'The Time Machine' or Lovecrafts 'ghouls'.
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