I think it should be left to the individual dwarf to make the choice on their facial hair.
This is the easiest way to settle this very old argument. Culture creep. Dwarven females do have beards, but after interaction with other races began to shave... or not depending on their whim and their own beauty preferences.
Besides, body hair on humans only really loosely follows specific gender guidelines anyway. Men in my family have a tendency towards very little and slow growing hair. My brothers both wear short beards and moustaches, mostly because it takes years for us to grow them. I literally can't. There are patches on my cheeks and most of the front of my chin where hair doesn't grow at all. And where it does grow, its blonde enough to be all but invisible anyway. I only have to shave once a month or so, and only start to look a little scraggly in the last couple of days of that. And I know women who grow hair, even sideburn and facial hair, quicker and more substantially than I do. You'd never know it, society dictates that women be more or less body and facial hairless. And so they are pretty vigilant to remove it as quickly as possible as a part of their daily routine.
When I was in college, there were 2 transfer student (div 2) women's basketball players from Lithuania on my school's team. Neither of them shaved their armpit hair, it wasn't much of a thing in their home country at the time. When asked about it, both laughed saying that they found out it gave them a competitive advantage. It tended to distract American players on the opponent's team, and their teammates just kind of got used to it and could take advantage. Its long been my contention that if there wasn't a societal bias against female body and facial hair, like finding a
Sliders style parallel universe where it isn't a thing, we'd probably be pretty surprised how hairy human women actually are. I do know at least one woman who could easily grow a moustache quicker than I could, but she is very vigilant in shaving it away every day. She is very pale skinned with very dark hair, any amount would stand out so she is really paranoid about it.