Let me see, I know things can go wrong with any or every deck but it is especially easy for them to go wrong when starting with a high threat, having only one way to lower it (Gandalf) and no treachery or shadow cancellation. I just give two quest examples - that I have played and they surprised me for destroying such a deck easily; because none of the quests rank among the very difficult. One is Pelargir, if you get one or two enemies on round 1, you will probably have to take at least one undefended as you won't have enough defenders. You get a bad shadow (I know there are only three copies) and you're done. Then Anduin, Hill Troll jumps at you round 1, almost guaranteed, what do you do? Let allies swallow it? Your threat goes up quickly, you get Evil Storm and there might be no allies to swallow the troll any more. Even Dain cannot take care of the troll many times in a row, and it will be hard to build a swarm quickly enough to kill him, especially if Dain is exhausted after defending. And this is a quest that I would hardly ever lose with a proper core set deck, yet I did with this particular Dwarven one.
Of course, when things go well, this deck will seem invincible but I still find it more vulnerable than some - solo especially. If you beat every quest every time, I do applaud you (or your luck).
Finally, however, I do agree about Dain and errata, I find his design quite cheap, since it is very hard to justify not playing him in a Dwarven deck; that I think is terrible with so many Dwarf heroes around.