I have a few things to say about this

On RP affecting the way a class is played,
As a paladin there are a few things that are forced on you *somewhat*
You shouldn't run like a little biatch in the face of evil *not much of a paladin if you run against unfair odds*
As a duergar thats fine *less your a zerker but hey, thats a diffrent story and still involves some form of RP*

You have this whole no neutral killing thing *less your RP gives a decent reason for it (And immortal dependant) though this doesn't hinder them much as I can't recall a time I ever killed a neut mob..*

Lack of killing via one skill
Aka, I can't spam bash, and perma lag you, ever.
Paladins have no reliable way to lag, as a twohand I had what? two skills? and those had more along the lines of pincer type lag...
So you must engineer traps..
As a duergar you can eat root/ get a bash legacy, wield axe;wield axe
bash bash bash bash get all corpse to a large portion of the Pbase *even at hero =P*

Mana,
Now elves.. eh they don't have much to worry about but as a human, UG running out of mana without certain progged items was almost always a fear even when fighting just one person..

So to put it in perspective
It costs 80 mana for sanc
80 for both essences
80? for that dodgy thing
10? for bless
30? for protection
10 for detect invis
10 for detect evil
70? for that detect area evil thingy
and to finish it all off
80? for champ stand

Thats a pretty pile of mana

How to deal with a paladin thats prepped up like this?
retreat... its easy, flee, qua teleportation

Oh, and most of these don't last much beyond 20 ingame hours..

As a duergar Mana isn't a issue, preps are, and yes they do require some time to gather, but you can continue to quaff/eat/zap so long as you have said items even if your stat bar is 1hp/1000 -40m/1000 -50v/1000 so long as you can get at these items they are usuable

A few lucky energy drains plagues spores bleeding (The list goes on, woe is me)

Target choices
As a paladin you really unless have some RP reason (Tribby/etc..) really only fight evils which although you can go toe to toe with a group of 4 solo with just your list of supps...
A group of neuts or even goodies can take you down (You get wanted, good tribbies hunt you down, *Ug*)

As a duergar your free too kill even your fellow cabal mates.

Now, I agree Paladins are STRONG but really only against evils, *I'm playing a evil currently so don't even get me started...*
And they can fall *Heh so what if it took a Vindicator that was stacked with hell gear, And a justicar that was equally stacked like a mofo*
I didn't have a sick ass PK ratio like you did *though I admit your gear and prep knowledge apparently goes way beyond mine*
So paladins aren't sick unstoppable unbalanced juggernaughts
Just damn close to it..

But really the only way to settle such a argument is for you to roll a twohand and take over the world!!! Muhahahahah.. no really I'm not kidding..