Dwarven Peace with gobbos is possible
Little backstory. I'm keeping my dwarf village quite small as I work on making an obsidian pyramid. I'm sitting at 20 dwarves. I however did send troops out to "negotiate" a one-time tribute from several civs including one goblin civ. Everyone, tribute or not, started sending traders except for the goblins.
They first sent snatchers, then snatchers with ambushes, and then more recently a 40 strong goblin siege. Luckily, I had long trained my original group of 7 to constantly raid and train as warriors (side note, all members of a raiding party need a skill of "Talented" or better to be successful and not be caught).
The goblins of "Brash Demon" got absolutely smashed. 7 vs 40. We were armored and armed with iron material armor and weapons. They...were...not. Not a single dwarf was hurt in the siege.
Because everything is above ground currently, except for my pump stack project and magma forges, I just sent a diplomat to Brash Demon so I could avoid more "distractions".
Apparently, he was a great success! Didn't expect for it to go so well, but our "persuasive" military helped.