Good ideas to what the etymology for 'Duergar' is, however, it is really much simpler. 'Duergar' is an English word for Dwarf. It either comes from the Norse dwarf name 'Dvegr/Dwergr' or comes from a very similar Anglo-Saxon word, I will go with the latter. The words are very close which isn't surprising considering both English and Norse are Germanic languages.

Though I believe that Duergar comes from Anglo-Saxon rather than Norse, I believe it may only have been in the Anglican dialects. Dwaerc is another Anglo-Saxon word for Dwarves. It obviously comes from the same route and has a similar sound.

So Duergar is not connected with the Celts. A few Celtic place names do exist in Northumbrian, however (though they are Anglicised).

Similar names for Dwarves:

Danish: Dværg
Deutsch: Zwerg
Dutch: Dwerg
Middle-English: Dwarrow
Norwegian: Dverg
Swedish: Dvärgar