Can you breed dwarves and make successively smaller and smaller ones?
Most primal dwarves have sufficient problems it's not likely they will have any children anyway.
The genetic change in one of the 5 categories involves a single base-pair ~ and it can occur to any line at any time ~ I think there's a fixed percentage, like 1 out of so many million. These are called spontaneous mutations. There are only a few hundred primal dwarves on the entire planet so this is not a common sort of thing.
There are entire groups of people who are of smaller than average stature who are not classed as dwarves by most folks ~ even though they may be shorter than 4'10". Pygmies may be found in the Philippines, parts of Africa (two varieties ~ one of them possibly ancestral to all human groups), in the Amazon, some islands in Indonesia, and in the Arctic. There you find a higher incidence of dwarfism among some Sa'ami, and, of course, the Eskimo.
Over the years I've known many such people. They're just like you and I except they use strap on extender peddles to drive their cars, and will always have extra mirrors. Remember the ladies who seem scrunched down in the seats of their small cars? Them too!
The lifespan for most dwarves seems to be shorter ~ Sandy Ottenbacher died at 18; Stephanie Takala disappeared from the records 25 years back; couple of other highschool friends fell into the category ~ Lanny Green, ... Steph was lucky ~ she didn't have any physical problems ~ just smaller all around ~ clear blue eyes, platinum blond ~ Northern Sa'ami I believe ~ but so short she had trouble with stairs and cars. Reverend Keppel and one of his sons were also dwarves, as was his father.
Then there are the Jewish dwarves from Louisville KY. They are well known in Seymour, Indiana.