They will probably take the place of ogres in this game. I'd be surprised if they used an actual language outside of grunts and roars.
Maybe, but since they already have a language and culture established in lore, it would be a real shame for them to only talk in grunts and roars. As I recall, quite a few of them had tattoos in Daggerfall used to indicate their position in society.
Also Dwarves is a term used by Giants, If the word dwarves did not originate from the Giants (if these are the same Giants) then we can simply say they speak english and nothing more.
I don't think that was said in game, it was a Morrowind dev "explaining" why dwemer were called dwarves as a retcon. It was more of a humorous explanation.