i got a good chuckle out of the above post, as in my most recent Khazad game, i did pretty much exactly what he's talking about. Monarch > Small > Pangea, Kandros. Started right by the Amurite capital, immediately made all nice and peaceful-like while building warriors. Built a second city and then sent my main stack down with a constant stream of warriors coming at them, wiped them out and took their two cities. This worked great since they were along the coastline to my east, and so i had a single expansion front, with no fear of anyone creeping up my backside.
I killed someone else too, rolled my warriors over from the Amurite campaign and started building Axemen, and curbstomped them. It was such a short war i don't even remember who they were. Unfortunately (as usual) that damn dragon popped up in a barb city to my southwest, blocking expansion in that direction (though really wasn't more than enough land for 2 or 3 cities anyway.) But it didn't really matter. By this point i had 9 cities (3 of my own, 2 Amurite, and 4 from the second dead civ), and was set to expand out again.
Ran into the Sheaim almost immediately after that, and then everybody else, while I was expanding. Got to about 12 cities and then dealt with the gold issues, but hey RoK holy city helped. Decided that Sheaim was the main problem, so traded resources and gold with Bannor and The Good Elves Whose Name I Can Never Spell.
By which times i had the Mines, which are pretty critical to the way I play Khazad in situations like this, since it allows me to divert off the metal line (since I got three Irons) and into economy to prevent myself from going broke from the REXing -- and to ensure the lovely production bonus.
By this time it was quite apparent that the Sheaim would be attacking me at any moment, after several poorly worded diplomatic requests. Really, do they think dwarves, DWARVES, respond well to THREATS?
I think not.
Especially since, in the meantime, i had completed Form of the Titan in my capital, Heroic Epic and National Epic in my second city -- and both those cities were production powerhouses, plus I had full coffers, so hey
Sheaim sent a stack of doom against my frontier city closest to them, which was pretty much what i expected. Which is why it was built on a hill, and i had bought Walls. At that point I didn't have much of a stack myself, due to consolidating former gains and concentrating on economy for a while, but i had 2 slingers, 5 axemen, and bambur in there, so i felt kinda safe. Not after i saw their stack though -- at least 15-20 pyre zombies and a bunch of hunters, at which point i resolved myself to losing that city. As soon as i saw that stack coming, i set science to 0%, switched to conquest, every building that could be rushed, was, and all cities switched to full military production.
Needless to say, i lost that frontier city. They also lost more than half their stack attacking it, and within a few turns i had a retribution stack with bambur at its head, an anti-zombie force composed of mobility-upgraded axemen, and fresh garrisons in every city. Also had Nilhorn, so used the giants to bombard since my catapults weren't really ready yet and slow as hell.
Took back my city 2 turns after i lost it, and wiped out the last Sheaim heretics maybe 10 turns later. The zombies were a pain but attrition is the best friend of the Khazad, and with the insane production that a fully mobilized dwarf empire can generate, especially with iron (before anyone else), experience upgrades from Aggressive, Form of the Titan, etc -- not only is the force huge, but they start off much better than pretty much anyone else's troops. At one point I was pumping out 4-5 Mobility + Shock Axemen a turn, then alternating Shock + Cover Axemen, all with Iron weapons, in addition to multiple Shock warriors and city defense Slingers. Then I started building Boar Riders just to pillage all their improvements, it was kinda ridiculous.
Rest of the game was just mopping up, look out Doviello, beelined to Druids, killed Lanun, then Basium (who the elves had brought in), then fought off the #2 and #3 empires (Bannor and Elves) who had gone to war as soon as I nailed Basium, then after that just casually wiped out Kurotates for a nice conquest victory.
So yeah, against Sheaim, generally rely on attrition and fast, decisive strikes. Pyre zombies are great and all, but if they throw them en masse against a decently defended city, let 'em, and then hit them when they're weakened. Sow the land with salt and let the streets run red with the blood of the unbelievers!