Although they have high life points for their level, Chaos dwarves are not a good monster to train on because of their accuracy. However, they seem to have a reasonable (albeit low) drop rate for Blue charms. On occasion, they may drop a muddy key which will get you quite an amount of mid-level items if you manage to get to the chest. Range seems to work better than melee.
It is revealed through the Azdaran document that all dwarves once possessed magic, but Zamorak put a curse on the dwarves that slowly corrupted the magic within them; the dark magic within their veins would eventually corrupt them into mindless beings locked in a perpetual, incoherent rage, although they seem to retain some form of basic intelligence, able to utilise weapons such as hand cannons and fight as a united force. What the Red Axe did with their kidnapped dwarves is presumably to forcibly unlock the tainted magic within them, and use the Ogre Shaman's magic to brainwash them into service.
Since the transition into chaos dwarves is more-or-less a 'natural' process after Zamorak's curse, it can be inferred that all dwarves who did not have their magic suppressed through the Council of the Elder Magi's rituals or controlled the curse through Saradomin's blessing would eventually turn into chaos dwarves.
Prior to the graphical update of dwaves, chaos dwarves appear to be otherwise normal-looking dwarves clad in steel armour and red clothing, and wielding warhammers.
After the graphical update the dwarves' look were updated into their canonical appearance, as detailed according to theLores and Histories entry, "The Coat Thief", describes the appearance of a chaos dwarf:
"He was like no dwarf I'd ever seen in Keldagrim. His skin was dark red and had a rough texture, and it seemed to glow from within like lava... Even unconscious, his face was locked in a grimace of rage. He smelled of sulphur and radiated unmistakable heat...
"...The heat was growing stronger. I stepped back, and Hilda did the same. The dwarf's skin glowed brighter and brighter red and then began to disintegrate, crumbling in on itself like wood curling up in a fire... In less than a minute he was gone, leaving only a few bones and some scorched armour fragments in a thinning cloud of black smoke..."