You're starting to find one of the differences between MM8 and MM6/7 - most maps have both low-level and some quite powerful dungeons, rather than being a "hard" map or an "easier" map. You probably haven't seen this yet with Dagger Wound Islands as you wouldn't have had access to Fly when you first left, and Ravenshore is probably the only truly "easy" map. So Alvar is probably the first map where you're discovering this - hence your trouble with the Dark Dwarf Compound.

FWIW, I always considered the DDC a mid-high level dungeon, for exactly the reasons you're finding, and I generally wouldn't tackle it myself until a bit later. Rock Blast seems to be the hardest hitting party-killer, pound-for-pound, and I never found any way to game that corridor, so I've always just waited until the party is strong enough to survive a hit or two. The Vampire is a valid strategy, but as I said on the other post, I don't like sharing XP with characters I'm not intending to keep, and the Vamp needs to be promoted to use Mistform, so that's a fair commitment for a character you're not using. And once you've progressed enough to hire a fully promoted Vamp, you'll likely be able to survive the corridor anyway.

In short, Master Water Magic is pretty easy to obtain, so MM8 really lends itself to bouncing around the maps to find & tackle whatever is appropriate for your current level, rather than suffering through "one region at a time".