I gave some thought to a similar problem for a still-unwritten fanfic(Dwarf-woman works on Nargothrond w/ her kinsmen, becomes fascinated w/ the new city's lord, yeah, yeah, highly derivative).

-Essentially what I came up w/ was this: the Dwarf admires the Elf as a piece of craftmanship: a good, if humbling, demonstration that Eru is indeed greater than Mahal.

-And Dwarf-women are treated as not quite as androgynous in appearance as ppl usually assume.  My assumption was that they could well be a trifle slimmer, softer-bearded, more refined in feature, etc. while still being similar enough to the males that a casual Elvish observer would assume that what they were seeing was simply a particularly youthful Dwarvish stripling, or one of better "breeding" than the ordinary run of Dwarf-few inhabitants of Beleriand would've met the ruling castes of Nogrod or Belegost, only the wandering merchant/craftsmen. 

So Dwarvish aesthetics might not be all that outlandish...they may just take it for granted that "made" things are gonna be more aesthetically pleasing, by and large, than "people" are.  And be astonished, or embarrassed, or envious, when confronted w/ Elvish beauty.