The Iron Hills, the most powerful kingdom in Wilderland?

[The Might]

And this quote proves just how important the part of the Men of Dale and Dwarves of Erebor was in the WOTR:

Yet things might have gone far otherwise and far worse. When you think of the great Battle of Pelennor, do not forget the battles in Dale and the valour of Durin's Folk. Think of what might have been. Dragon-fire and savage swords in Eriador, night in Rivendell. There might be no Queen in Gondor. We might now hope to return from victory here only to ruin and ash.

As far as Sauron's strategy is concerned, I can understand why he did that. As told in various of Tolkien's writings not all Dwarves were good, and so he perhaps thought that by using persuasion and giving them gold and treasures he would be able to draw them on his side, and also to avoid a direct confrontation. The Iron Hills and the Dwarves of Erebor were however good and fortunately refused his offer.
It is also important to remember the exiles who settled in the Iron Hills were of the clan of the Longbeards, most commonly known as Durin's Folk so were of the most noble kind of Dwarves.

It is also important to remember that Sauron offered his enemies such choices even when they were clearly close to defeat, for example at the Black Gate. Even though the Host of the West clearly had no possibility to win, Sauron still gave them the choice to retreat and surrender.