Yes, Iluvatar gave the Dwarves life. I think the distinction is that the Elves were created by Iluvatar before Aule made the Dwarves, even though the Fathers of the Dwarves were briefly awake before the Elves.
The Elves were also the first to permanently wake.
And, since they were writing the history they could call themselves whatever they wanted, one of the advantages of writing the history yourself. [img]smilies/smile.gif[/img]
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