Right, this isn't like WoW or anything, where from the get-go you've been able to play other races, nor is this an entirely new game where they can design everything from the outset.
They have to go over every bit of dialogue in the game, go over quests and rewrite them to make their plotlines still comprehensible, many of which were written by developers who are no longer with the compnay-- over 20 years of stuff to go over and redline and an unfathomable amount of spaghetti code from yesteryear to sift through,, for. . . you can play as an elf and unlock Prif day 1 I guess.
You then need to go over every wearable item in the game, and remodel everything, twice to fit the two new body types you're introducing.
You also then need to make sure every single questline that hinges on your player character being human has a rewrite that makes sense, that can still lead into the same quest follow-ups, et cetera--
it's a monumental task. I think OP's implementation of it being cosmetic is probably the only actually realistically accomplishable way of handling this, and even then, it would be a monumental task just to refit every item in the game to a dwarven body type.
and at the end of the day, after a certain point, you have to come to grips with 'how much of the playerbase will care enough to do it'. this isn't a silly game jam level rework or side project, this is the kind of thing that would need all hands on deck to make function, and need to be justified to executives as something that could bring in more money, that this is something players are fine with taking the place of 2-3 major updates that year, or more.
it's a fun thought, but for a 20+ year old mmo, the infrastructure to make it work and backport everything just isn't there, not at the level of funding RS3 is currently allocated.